Get a Grip on Your 2008 Taxes

Just as certainly as taxes themselves, each year U.S. taxpayers can rely on the Internal Revenue Service (IRS) changing the tax code. In 2008, there are a few important new deductions and changes that may save on the amount of money you owe Uncle Sam. Fortunately, there are many resources you can use your computer to access online that can help you with your taxes. Here’s a look at the changes for 2008 and some of the resources.

Personal Deductions: The value of each personal and dependency exemption is $3,500 in 2008--a $100 increase over 2007. The IRS also announced that 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).

Mileage Deductions: Mileage deductions typically change every year, but high gas prices and other factors led to time-constrained mileage deductions. Check out the IRS table on mileage deductions for such purposes as work-related, medical, moving-related and charitable travel.

Tuition and Fees Deduction: Qualified tuition and required enrollment fees up to $4,000 that you pay for yourself, your spouse or a dependent may be deductible--without having to itemize. You can find out more in IRS Publication 970, Tax Benefits for Education.

First-Time Homebuyers Tax Credit: If you bought your first home between April 9, 2008, and June 30, 2009, you may be eligible for a tax credit of 10 percent of the purchase price of the home, with a maximum credit of $7,500 for either a single taxpayer or married couple filing jointly. First-time homebuyers are defined as those who have not owned a home in the three years prior to a purchase. The credit must be paid back in equal payments over 15 years.

Real Estate Tax Deduction: If you don’t itemize your deductions, but still pay real estate tax, you are eligible for an additional standard deduction equal to the amount of real estate taxes paid, up to $500 for single filers or $1,000 for joint filers.

Educators’ Out of Pocket Expense Deduction: If you’re an educator, you may be able to deduct up to $250 of the cost of books, supplies, equipment and software you purchased for use in the classroom. You must work at least 900 hours during a school year as a teacher, instructor, counselor, principal or aide in a public or private elementary or secondary school.

Recovery Rebate Credit: Didn’t qualify for or receive your 2008 economic stimulus payment? You may be eligible for a tax credit. Check out the Recovery Rebate Credit particulars here.

Earned Income Tax Credit (EITC): Low-wage working families and individuals may qualify for this tax credit. The maximum earned income tax credit for low- and moderate-income workers and working families with two or more children is $4,824, up from $4,716 in 2007. The income limit for the credit for joint return filers with two or more children is $41,646, up from $39,783. For more information, see IRS Publication 596 for 2008.

Where else can you go to get more information? IRS Enrolled Agent Eva Rosenberg’s TaxMama.com has useful articles, as well as a tax deadline reminder calendar on her site. Web sites for popular tax prep software packages TaxCut and TurboTax also have helpful information and resources.

The IRS Web site is a wealth of information for taxpayers and offers free downloads of forms, instructions and publications. It even houses a collection of useful information for individuals on one page.

Your tax situation may vary due to a variety of factors, including age, income and other aspects. Since this is not a comprehensive list of changes and rules, it’s always wise obtain counsel from a qualified tax advisor.