Copyright 2008
News Generation, Inc.

Latest Edition of Ernst & Young Tax Guide Provides Useful Tips for Filing Returns

February 2008

New York, February 20, 2008 - With recent tax changes coming from Congress - most notably a one-year patch to the Alternative Minimum Tax (AMT) - it becomes critical for individuals to stay informed of new legislation before filing their 2007 tax returns. Tax planning requires a year round approach, but now is the best time to take advantage of tax law changes for the 2007-filing year, according to the authors of the Ernst & Young Tax Guide 2008.

The way to avoid surprises at tax time is to take control today - educate yourself and proactively put a plan in place. The Ernst & Young Tax Guide 2008 features tips for taxpayers on recent tax law changes, including the 50 most commonly overlooked deductions, enhanced coverage of the AMT and the 25 most common tax-filing errors. When it comes to filing 2007 tax returns, taxpayers should be aware of the following:

1. The Tax Increase Prevention Act of 2007 - Passed in late December, this act provides relief from the AMT for many taxpayers via the installment of a one-year "patch." The AMT exemptions for 2007 rose to $44,350 from $42,500 for singles; $66,250 from $62,550 if married filing jointly or a qualifying widower; and $33,125 from $31,275 if married filing separately.

2. Kiddie Tax In 2007, the unearned income of children under age 18 is taxed at the marginal rate of their parents, as if the parents received the income, rather than at the child's lower rate. In 2008, the maximum age of a child subject to the kiddie tax has changed from under age 18 to under age 19, as well as full-time students over age 18 but under age 24.

3. School Teacher Deductions Extended through the 2007-filing year, eligible educators can now deduct up to $250 for classroom expenses connected with books, certain supplies and computer equipment, without having to itemize the purchases.

4. Higher Education Expenses Also extended through the 2007-filing year, eligible taxpayers are able to claim a deduction for up to $4,000 of qualified higher-education expenses. The deductions are available to single taxpayers with adjusted gross income up to $65,000, or $130,000 married filing jointly, even if you do not itemize deductions.

5. Charitable Donations - In 2007, any monetary donations will not be deductible unless you have a bank record, credit card statement or receipt that shows the name of the charity, the date and amount of the contribution regardless of the actual amount.

6. Increased Income Limits for Hope and Lifetime Learning Credits - Also taking effect in 2007, your Hope and Lifetime Learning credit is phased out (or gradually reduced) if your modified adjusted gross income is between $47,000 and $57,000 (or $94,000 and $114,000 if you file a joint return). However, you cannot claim an education credit if your MAGI is $57,000 or more ($115,000 or more if filing jointly).

###