More Tax Law Changes

In addition to pre-programmed changes in dollar limits, here are five noteworthy new tax laws:

Recovery Rebate Credit. This new credit allows clients to claim a refundable credit based on the economic stimulus check rules using 2008 information. If you did not qualify to receive the stimulus payment last year or you did not receive the full amount you could be eligible.

Kiddie Tax Expands. 2008 marks the first year to apply the kiddie tax rules to children under 19 (24 if a qualified student). This is up from age 14 prior to 2006. This law applies the parent’s tax rate to a child’s excess unearned (investment) income over $1,800 in 2008.

Widows Receive Higher Home-sale Gain Exclusion. After 2007 a surviving spouse may be able to use the full $500,000 capital gain exclusion (formerly $250,000) when they sell their principal residence for up to two years after the death of their spouse.

Emergency Responder Benefit. From 2008 to 2010 qualified emergency responders can omit certain state or local government benefits from their income. This includes up to$30 per month in qualified payments and rebates or reductions of property or income taxes for providing services.

Transportation Worker Meal Expense Limits Increase. Workers subject to the Dept. of Transportation hours of service rules can now deduct 80% of business meals. This applies to certain: air transportation workers, interstate truck drivers, interstate bus drivers, railroad workers, and merchant mariners.