2008 BAILOUT CHANGES: (Emergency Economic Stabilization Act of 2008)

DEDUCTION FOR STATE AND LOCAL PROPERTY TAXES EVEN IF NOT ITEMIZING

• A maximum $1,000 for Joint Filers, and $500 for Single Filers can be deducted without itemizing deductions.

• This has been extended through 2009

STATE AND LOCAL SALES TAX DEDUCTION

• This has been extended through 2009. You can either deduct income tax paid during the year or sales tax from a table.

HIGHER EDUCATION TUITION DEDUCTION

• This above the line (bottom of Page 1 of return) deduction is limited by adjusted gross income.

• Barred if filing separately or if another person can claim exemption for the taxpayer or dependent. Maximun deductible $4,000 reducing to $2,000, and finally eliminated if AGI exceeds $160,000 for joint filers.

TEACHERS CLASSROOM EXPENSE DEDUCTION For Up to $250 IS BACK FOR 2008 & 2009.

RESIDENTIAL ENERGY PROPERTY EXPENDITURES EXTENDED THROUGH 2016.

• Energy saving insulation materials and exterior windows & doors earn credit up to $500.

AMT PATCH FOR 2008

• AMT exemption amounts for 2008 have been raised to $69,950 for married filing joint returns and surviving spouses, $46,200 for single taxpayers and heads of households, and $34,975 for married couples filing separately for 2008.

• This was incredibly important. Last year the 2007 patch wasn't passed until January of 2008. This patch is more generous than the 2007 patch.

TAX-FREE DISTRIBUTIONS FROM IRA'S DIRECTLY TO CHARITIES ALLOWED THROUGH 2009.

This allows you to contribute up to $100,000 from your IRA to charity without increasing your adjusted gross income. Taking a distribution from your IRA and then contributing it to charity could: Increase your taxable social security, or reduce your personal deductions. You can transfer up to $100,000 in 2008, and again in 2009.

MORTGAGE FORGIVENESS DEBT RELIEF (ACT OF 2007)

• This 2007 Act has been extended through 2012 instead of 2009.

• WARNING. This only applies to "Acquisition Debt" and DOES NOT help with Home Equity Debt! Refinancing for taking money out for cars, paying off credit cards, etc. isn't included!

Many other changes were included in the 2008 Bailout. Almost 300 changes were made to the Internal Revenue Code by this bill.

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