Tax Tip 1 What's New for 2008
Tax tips for tax year 2008
What’s New for 2008?
The following changes are discussed in more detail in Publication 17, Your Federal Income Tax For Individuals, and the Instructions for Form 1040.
Exemption Amount Increased. The amount you can deduct for each exemption has increased to $3,500. You lose all or part of the benefit of your exemptions if your adjusted gross income is above a certain amount depending on your filing status.
Standard Deduction Amount Increased. The standard deduction for taxpayers who do not itemize deductions on Schedule A of Form 1040 is, in most cases, higher for 2008. The amount depends on your filing status, whether you are 65 or older or blind, and whether an exemption can be claimed for you by another taxpayer. The basic standard deduction amounts for 2008 are: Head of Household — $8,000; Married Filing Jointly and Qualifying Widow(er) s — $10,900; Married Filing Separately and Single — $5,450.
Additional Standard Deduction for Real Estate Taxes. If you do not itemize your deductions, you can claim an additional standard deduction for real estate taxes you paid. Any state or local real estate taxes you paid that would be deductible on Schedule A if you were itemizing deductions, up to $500 ($1,000 if married filing jointly). You can use the 2008 Standard Deduction Worksheet found on page 35 of the 1040 Instruction Booklet to figure your standard deduction.
Alternative minimum tax (AMT) exemption amount increased. The AMT exemption amount is increased to $46,200 for single taxpayers; $69,950 if married filing jointly or a qualifying widow(er); and $34,975 if married filing separately.
Foreign Earned Income. The maximum foreign earned income exclusion amount available on Form 2555 or Form 2555-EZ is increased to $87,600. The housing exclusion and/or deduction floor has increased to $14,016.00 and the housing cap, other than for certain cities listed in the Instructions for Form 2555, has increased to $26,280.00 if your qualifying period includes all of 2008.
Note: If you claim the foreign earned income exclusion or the foreign housing exclusion on Form 2555 or Form 2555-EZ, your must figure your tax using the Foreign Earned Income Tax Worksheet found on page 37 of the 2008 Form 1040 Instruction Booklet.