I have put off publishing this post as long as possible, in the hopes that Congress would act promptly to extend expiring tax breaks. But I can’t wait any longer.
As of this writing several popular tax breaks are scheduled to “expire” on December 31, 2007. These tax breaks may not be available in 2008. So 2007 may be your last chance to take advantage of them.
These popular tax breaks include:
* the deduction for PMI - private mortgage insurance - premiums (it is still a complete mystery to me why this should be deductible),
* the option to deduct state and local sales tax paid instead of state and local income tax paid,
* the “above-the-line” adjustment to income for qualified tuition and fees,
* the ability to transfer up to $100,000 tax-free from an IRA to a qualified charity,
* the “above-the-line” adjustment to income for elementary and secondary school “educator expenses”, and
* the residential energy tax credit.
You should take this into account when planning your year-end moves. For example -
* If you are planning to buy a new car, SUV, motorcycle, or other “big ticket” item in the near future you may want to do so before the end of the year to be able to deduct the sales tax.
* If you have not already claimed the maximum “lifetime” $500.00 energy tax credit you can purchase qualifying items, such as insulation, windows and doors, or heating and air-conditioning equipment, before year end. You can find out what type of energy-saving purchases will qualify for the credit at the Energy Star website.
* If your AGI does not permit you to claim a Hope of Lifetime Learning education tax credit, and you have not yet paid the maximum amount of qualified tuition and fees that can be deducted based on your income, be advised that you can deduct qualifying amounts paid in 2007 for an academic period that begins in the first three (3) months of 2008. FYI, this rule also applies for the tax credits.
The first five (5) items on the above list of expiring tax breaks are included in the “extender” portion of the recently introduced Tax Reduction and Reform Act of 2007. This means that these items could be available for tax year 2008. It is expected that the extender section will be extracted from the larger bill in the coming weeks for “expedited consideration” so action can be taken before Congress adjourns for the year in November. I will keep you informed on developments in this area here at TWTP.
to be continued……….