2008 Tax Changes for Individuals : (For Quick Look Click here)           First-time home buyers Refundable Credit :           First-time homebuyers should immediately begin planning to take advantage of a new tax credit :           You may be able to claim a credit of up to $7,500 if you are buying a house for the first-time and if your modified, adjusted gross income is less than $95,000 ($170,000 if married filing jointly). This credit is much similar to a interest free loan. You must pay it back in 15 equal yearly installments starting after two years after the year in which you claimed the credit.           Available for a limited time only, the credit :             Applies solely to home purchases after April 8, 2008, and before July 1, 2009.   Either reduces a taxpayer’s tax bill or increases his or her refund, dollar for dollar.   Is fully refundable, meaning that the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax that they owe.           Eligible taxpayers will claim the credit on the new IRS Form 5405.     If you are a nonresident or dual-status alien during the year then you are not eligible to claim this benefit.           Real Estate Tax Deduction :           There is an additional standard deduction for those who do not itemize their deductions, but instead pay real estate taxes. The additional deduction amount is equal to the amount of real estate taxes paid up to $500 for single filers or up to $1,000 for joint filers. This deduction is available for the 2008 and 2009 tax years and will increase your standard deduction.           Tuition and Fees Deduction :           You may be able to deduct qualified tuition and required enrollment fees at up to $4,000 that you pay for either yourself, your spouse or a dependent. You do not have to itemize to take this deduction. However, a taxpayer cannot take both the tuition and fees deduction and education credits (Hope & Lifetime Learning Credits) for the same student in the same year. Income limits and other special rules apply to each of these provisions.            Recovery Rebate Credit :           If you did not qualify or did not receive the maximum amount for the 2008 economic stimulus payment you may be entitled to a recovery rebate credit when you file your 2008 tax return.           EIC :     The maximum earned income tax credit for low and moderate income workers and working families with two or more children is $4,824, an increase from $4,716. The income limit for the credit for joint return filers with two or more children is $41,646, an increase from $39,783.           New Rules for “Cash” Charitable Contributions :           Since the tax year of 2007, on order to deduct any charitable donation of money, you must have a bank record, credit card statement or a written communication from the recipient showing the name of the organization and the date and amount of the contribution.           Exemption :     The value of each personal and dependency exemption, available to most taxpayers, is $3,500, an increase of $100 from 2007.           Standard Deduction :     The new standard deduction is $10,900 for married couples filing a joint return (up $200), $5,450 for singles and married individuals filing separately (up $100) and $8,000 for heads of household (up $150).           Hope Credit :     The maximum Hope credit, available for the first two years of post-secondary education, is $1,800, up from $1,650 in 2007.           Savers Credit :     The income limit for the saver's credit is $53,000 for joint filers (up $1,000), $39,750 for heads of household (up $750) and $26,500 for singles and married persons filing separately (up $500).  Low and moderate income workers who contribute to a retirement plan, such as an IRA or 401(k), may qualify for the credit, which is available in addition to any other tax savings that apply.           Traditional or Roth IRA Contribution Limits :           $5000 (increased by $1000) and filers who reach age 50 before the end of 2008 can contribute another $1,000 subject to various phase-out limits.           Indexed Tax Brackets :     Thanks to higher inflation in the past year, the 15, 25, 28, 33 and 35 percent tax brackets all kick in at a bit more than 2 percent higher levels of income than in 2007           Quick Look:         Here's a quick review of some of the tax changes you'll see from 2007 to 2008 as a result of inflation adjustments and tax law changes.             Provision 2008 2007           Mileage rate for medical and moving expense deductions (1/1/08 - 6/30/08) 19¢ per mile 20¢ per mile   Mileage rate for medical and moving expense deductions (7/1/08 - 12/31/08) 27¢ per mile     Maximum wages subject to social security tax $102,000 $97,500   Social security earnings limit       - Below full retirement age $13,560 $12,960   - Full retirement age No limit No limit   Annual gift tax exclusion (per donee) $12,000 $12,000   Maximum retirement plan contributions       - IRA for those under age 50 $5,000 $4,000   - IRA for those 50 and over $6,000 $5,000   - SIMPLE plan for those under age 50 $10,500 $10,500   - SIMPLE plan for those 50 and over $13,000 $13,000   - 401(k) plan for those under age 50 $15,500 $15,500   - 401(k) plan for those 50 and over $20,500 $20,500   "Kiddie tax" threshold $1,800 $1,700   "Nanny tax" threshold $1,600 $1,500   Personal exemption $3,500 $3,500   Standard deduction $3,500 $3,400   - Single $5,450 $5,350   - Joint returns & surviving spouses $10,900 $10,700   - Married filing separately $5,450 $5,350   - Head of household $8,000 $7,850   - Additional for elderly or blind (married) $1,050 $1,050   - Additional for elderly or blind (single) $1,350 $1,300

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