As you get ready to do your 2008 income taxes, make sure you take advantage of every opportunity under the tax code. Here are a few of the changes that you should keep in mind:
Recovery Rebate Credit – If you didn’t qualify for an economic stimulus payment last year, you might still be able to get that money. The payments were initially based on your 2007 income, and if your income was too low or too high, you didn’t get a check. The IRS offers help in calculating whether you qualify using your 2008 income.
Increased ontribution limits for IRAs – The tax rules permit taxpayers to contribute to traditional IRAs and Roth IRAs if their income falls within certain parameters. If your income is too high you will be limited in these contribution, but all of the limits increased for 2008.
Standard Mileage Rate Change – For the first six months of 2008, the standard mileage rate for business use of your vehicle was 50.5 cents per mile. It was 58.5 cents per mile for the rest of the year. The rates also changed for miles driven for medical or charitable reasons.
Capital Gains Taxes Lowered – Those with lower incomes will benefit from a reduction in the lowest capital gains rate. The formerly 5% rate for married taxpayers with income under $65,100 and single taxpayers with income under $32,500 has now been reduced to 0%.