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The Tax Guy by Bill Bischoff (Author Archive)
Four Tax Changes You Need to Know About
LAST MONTH, CONGRESS passed four new laws that are likely to have a significant impact on both individuals and small businesses come tax season. The changes may not stop there. We'll probably see at least one more new law later this year to retroactively extend a bunch of tax breaks that expired at the end of 2007. Of course, we'll keep you posted. In the meantime, here's what you need to know about the most important tax changes included in the latest laws.
While the name of this legislation makes it sound like a big deal, it's actually nothing more than a one-year "patch" to the dreaded alternative minimum tax (AMT) rules. The goal: to prevent millions of taxpayers from being hit by the AMT on their 2007 returns. The patch has two parts.
The most important provision in the Mortgage Forgiveness Debt Relief Act of 2007 (the "Mortgage Relief Act") is a three-year income exclusion for qualifying discharges of principal residence debt. In other words, homeowners will get a reprieve on taxes that they would normally owe when their mortgage is either completely or partially forgiven by the lender. This new law also includes two other tax changes worth noting.
1. Tax Increase Prevention Act of 2007 Provides AMT Patch
While the name of this legislation makes it sound like a big deal, it's actually nothing more than a one-year "patch" to the dreaded alternative minimum tax (AMT) rules. The goal: to prevent millions of taxpayers from being hit by the AMT on their 2007 returns. The patch has two parts.
First Part: Higher AMT Exemptions
The liberalized AMT exemption amounts for 2007 are:
$66,250 for married individuals filing jointly and surviving spouses (up from $62,550 for 2006)
Without this change, the AMT exemption amounts for 2007 would have been much smaller: $45,000, $33,750, and $22,500, respectively.
Second Part: Personal Nonrefundable Credits Can Offset AMT Liabilities
The second part of the patch allows so-called personal nonrefundable tax credits to help offset your 2007 individual AMT bill, as well as your regular tax bill (the same credits could be used for 2006). Here are the personal credits you can use.
Bottom Line: For 2007, higher AMT exemption amounts and the ability to use personal tax credits will not only help you reduce your exposure to the AMT, but will also insulate our beloved incumbent politicians from massive voter discontent for the time being. Keep in mind, however, that yet another patch will be required to preserve the status quo for 2008 and beyond.
2. Tax Provisions in Mortgage Relief Act
The most important provision in the Mortgage Forgiveness Debt Relief Act of 2007 (the "Mortgage Relief Act") is a three-year income exclusion for qualifying discharges of principal residence debt. In other words, homeowners will get a reprieve on taxes that they would normally owe when their mortgage is either completely or partially forgiven by the lender. This new law also includes two other tax changes worth noting.
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Posted: 12:59 AM EST July 27, 2009
Posted by: gr82beachbumit
Bteeple-OMG You're kidding right? OH MY GOD AGAIN!!!!! A basic right to have children and own a home you can't afford?????Since when is it a basic right to do whatever the hell you want without consequences or the resources to back your irresponsible decisions. You and this type of attitude is part of what is wrong in this country right now. " The "I am an American so entitled to everything because I breath" mentality. It is not a basic right to have things you can not afford, not work for, nor pay for. It is also not a basic right to have children if you can not take care of them .Where the hell did you get that idea from? That is called child abuse. Guess who takes care of those kids that you have and can't afford? You got it right, us and those high taxes you are so complaining about. Nobody told you you are entitled to a high paying job for free. You have to work at it. Stop whining. We are one of the richest countries in the world but the most unhappiest people? I wonder why thi...(Read more of this comment)
Posted: 11:04 AM EST March 21, 2008
Posted by: mchpstud
To everybody who posted here: Get over it!! Quit whining, get off your ass and do something!! God...you people sound like a bunch of babies!!! wah wah wah
Posted: 12:15 PM EST March 02, 2008
Posted by: bteeple
To the person that put himself through 8 years of school, congratulations. I would expect someone with your extensive educational background would understand the fundamental status of our economy and the causes, as well as an individuals right to pursue the American dream. I have some questions for you. To begin with, why are the middle class citizens of this country dropping in class and disappearing at an alarming rate? Why does Warren Buffet pay a 17% tax on his income compared to his secretary's 30%? When did a fundamental human right to bear children and own a home to provide shelter for your family become a social economic privilage? The one thing you have to understand my educated friend is that there is a bigger machine at work, much bigger than the individuals expressing there hardships and frustrations, but 300 million individuals speaking together we can change America for the better and that is what you see happening here.
Posted: 4:19 PM EST February 27, 2008
Posted by: gr82beachbumit
If you don't like your life change it. I put myself through 8 years of college with no help and no money! Why does everyone feel they should hold other people and/or entities responsible for their bad choices in life? By the way, I am dying to know what job the person has that only pays 20 grand for a college degree and does not offer medical insurance. McDonalds pays more than that. To the 2 people who can't live on 80 grand try living within your means. And to all the people who have kids they can't feed. Here is a concept, if you can not afford them don't have them!!!!!Another brillinat idea of a concept,If you can't afford a home don't buy one! It is no great sin to live in a beautiful townhome or Apartment. Give me a break, I went to read about tax laws and I get a bunch of failure to take responsiblity whiners. Where were your parents when the values were handed out?
Posted: 3:32 PM EST February 27, 2008
Posted by: glendarra
Of course if you didn't have teachers (underpaid of course) to teach you in the first place, you wouldn't have the $300K salary at all. I wonder how all the 'self-made' professionals think they made it this far in life without any help. The people who teach us, protect us, and defend us are the ones who 'should' be getting those higher salaries. But that will never happen in America! And YES--some of us teachers have 4.0 grade point averages in undergraduate and graduate schools as well! (wanna know a secret? Some of us also have doctorate degrees as well). What do we make, you ask? A DIFFERENCE...
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