Adoption Credits: Beginning in 2007, the credit allowed for an adoption of a child with special needs is now $11,390 and the maximum credit allowed for other adoptions is the amount of the qualified adoption expenses UP TO $11,390. The credit begins to phase out if you have modified adjusted gross income of $170,820 or more and is completely phased out
if you have modified adjusted gross income of $210,820 or more.
Adoption assistance program: Beginning in 2007, you may be able to exclude up to $11,390 from your gross income for qualified adoption expenses paid or incurred by your employer under a qualified adoption assistance program in connection with your adoption of an eligible child. This income exclusion starts to phase out if your modified adjusted gross
income is $170,820 or more and is completely phased out if your modified adjusted gross income is $210,820 or more.
Alternative minimum tax credit: The AMT exemption amount was patched and saved a large tax increase just under the wire!
Archer Medical Savings Accounts Increased: The minimum annual deductible of a high deductible health plan increases to $1,900 single or $3,750 for family coverage. The maximum annual deductible of a high deductible health plan increases to $2,580 and $5,650 for family coverage. Maximum out of pocket expenses increase to $3,750 and $6,900 for family coverage.
Capital asset treatment for self-created musical works: Musical compositions and copyrights in musical works are generally NOT capital assets. However, you can elect to treat these types of property as capital assets if you sell or exchange them in tax years beginning after May 17, 2006 and they are: #1) Your personal efforts which created the property #2) You acquired the property under circumstances, such as a gift, which would have adjusted the basis of the property or for whom it was prepared or produced.
Charitable contributions: NEW RECORDKEEPING REQUIREMENTS FOR CASH
CONTRIBUTIONS! You cannot deduct a cash contribution, regardless of the amount, unless you keep as a record of the contribution a bank record (such as a canceled check), a bank copy of the canceled check, or a bank statement containing the name of the charity, the date, and the amount or a written communication from the charity verifying the contribution including the date, the amount.
Credit for prior year minimum tax: If you have any unused minimum tax credit carryforward from 2003 or earlier years, your minimum tax credit allowable for 2007 is not less than the AMT refundable credit amount. Which means that if the refundable part of the credit is more than your tax, the excess becomes a refundable amount.
Long-term unused minimum tax credits: To figure the refundable amount of your minimum tax credit, you must first determine whether you have any “long-term” unused minimum tax credits. Your long-term unused minimum tax credit is the amount of your minimum tax credit carryforward from 2003 from 8801, line 26, reduced by the amount of any minimum tax credits you claimed in 2004, 2005, and 2006.
AMT refundable credit amount: After figuring your long-term unused minimum tax credit, you must figure your “AMT refundable credit amount”. Your AMT refundable credit is the greater of: #1) 20% of your long-term unused minimum tax credit or #2) the lesser of $5000 or your long-term unused minimum tax credit. The AMT refundable credit amount is reduced if your AGI exceeds certain threshold amounts based upon your filing status.
Single: AGI phaseout begins at $156,400 and is eliminated at $278,900
Married Jointly: begins at $234,600 and is eliminated at $357,100
Married separately: begins at $117,300 and is eliminated at $178,550
Head of the household: begins at $195,500 and is eliminated at $318,000
Additional child tax credit earned income threshold increased: The additional child tax credit computation for earned income has increased to $11,750.
Earned income credit amounts increased: The amount of the earned income tax credit has increased to: $2,853 for one qualifying child, $4,716 for more than one qualifying child and $428 if there are no qualifying children.
The maximum earned income amount has also increased to: $37,783 for more than one qualifying child (single) and $39,783 (married filing jointly) and $33,241 for one qualifying child (single) and $35,241 (married filing jointly). If you have no qualifying children the earned income threshold is $12,590 (single) and $14,590 (married filing jointly).
Investment income has increased: The maximum amount of investment income a person may have and still qualify for the earned income credit has also increased to $2900.
Advance payment of the earned income credit: Advance payments of the earned income credit is now $1712.
Education Savings Bond exclusion: The amount of interest exclusion is phased out if your filing status is married filing jointly or qualifying widow(er) and your modified AGI is between $98,400 and $128,400. All other statuses have a phase out beginning at $65,600 and $80,600.
Expired tax benefits: Katrina tax relief is now ended. Qualified electric vehicle credits are no longer available.
Health Savings Accounts: The minimum annual deductible of High deductible health plans increases to $1,100 ($2,200 for family coverage) and the maximum annual deductible and other out of pocket expenses limit increases to $5,500 ($11,000 for family coverage).
Income limit increases for Hope and Lifetime Learning Credits: Modified AGI limitations have increased to $94,000 to $114,000 (mfj) and $47,000 and $57,000 (single) in order to claim either education credits before phase out of the credits.
Increase in Limit on Long Term Care Exclusion: The per diem payments made under a long term care insurance contract increases to $260 per day. The limit applies to the total of these payments and any accelerated death benefits made on a per diem basis under a life insurance contract because the insured is chronically ill.
Mortgage Insurance
Premiums treated as Home Mortgage Interest: Premiums that you pay or
accrue for qualified mortgage insurance during 2007 in connection with a home acquisition debt are deductible as home mortgage interest. The amount you can deduct is reduced by 10% for every $1,000 by which your AGI exceeds $100,000. ($50,000 MFS)
Deduct the qualified Mortgage insurance premiums on Sch. A. for 2007 premium payments only.
Social security and medicare taxes: The maximum amount of wages subject to social security tax has increased to $97,500 without any limit for medicare taxes.
Standard mileage rates use of your personal car:
Business related mileage is now 48.5 cents per mile
Medical related mileage is now 20 cents per mile
Charitable related mileage is now 14 cents per mile
Exempt organizations: Certain exempt organizations required to file form 990 or 990 EZ must now attach the following information to their returns:
#1) A list of the amount of interest, annuities, royalties or rents received from each controlled entity.
#2) A list of any loans made to each controlled entity.
#3) A list a any transfer of funds between the controlling organization and each controlled entity.
New York State Income Tax Changes:
Solar energy system equipment credit: IT-255 has been expanded so that condo and coop housing corporations may now claim a percentage of the qualified expenditures for qualified solar energy system equipment purchased and installed by the coop or condominium association.
New subtraction for living organ donors: Maximum subtraction of up to $10,000 relating to the travel, lodging and lost wages due to the donation, while living, of human organs to another person for human organ transplantation.
New child and dependent care credit: New York City form IT-216 for qualified daycare expenses.
New historic homeownership rehabilitation credit: 20% credit of the qualified rehabilitation expense of a qualified historic home located in New York State. Form IT 237.
New volunteer firefighters and ambulance workers credit: New $200 refundable credit to a full year New York state resident who is an active volunteer firefighter or ambulance worker for the ENTIRE year. Form IT 245
New empire state commercial production credit: Credit to qualified commercial production companies or sole proprietors for qualified production costs paid or incurred. Form IT 246.
