Reduced rates on long term capital gains and dividends continue this year, set to expire 2010.

The AMT exemption for 2006 was modified providing temporary relief for this year. This temporary relief has not been extended as of this writing.  There currently is a bill approved by the Senate awaiting House approval.  It is anyone’s guess what will happen in the future. 

There will be a wide variety of credits for energy efficiency upgrates for homeowners this year.  Of course there are limits and restrictions all of which are detailed on new Form 5695

A number of key exemptions and rates changed for this year:

                Mileage rate for business is             50.5 cents per mile

                Standard deduction is                     10,900 married and 5,450 singles

                Personal Exemption                        3,500

                Annual exclusion for gifts in 2007      12,000

 Kiddie tax applies to children under 18.  For next year, the rules have been expanded to apply to full time students aged 18-24    These provisions used to apply to children under 14 but have been greatly expanded recently.  Basically after the first 1,700 of unearned income, the income is taxed at the parent’s bracket.

 Social Security changes:

                Under full age retirement recipients can earn up to 13,560 for the year

                Benefits have increased 2.3% for 2008

                Wage base subject to tax has been increased to 102,000

 The IRS continues to pursue a goal of making brokers account for cost basis of securities sold.  If you keep your securities with a broker it may be beneficial to give him the cost basis of any securities he is not aware of so the broker has all your cost basis records.

Last chance to make nontaxable IRA transfers to eligible charities? The Pension Protection Act of 2006 (PPA) created an up-to-$100,000 annual exclusion from gross income for taxpayers age 70 1/2 who make otherwise taxable IRA distributions that are qualified charitable distributions. But the exclusion, unless extended by Congress, is only available for distributions in tax years beginning in 2006 and 2007.

You should have received your NYState Middle Class Star rebate by now.  You have until December 31, 2007 to claim it.

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