Unless you’ve been living under a rock, you’ve probably heard about the $700 billion bailout plan that was passed recently in an attempt to rescue the housing market.  What you may not know is that there were several tax relief provisions included in this bill.

Included in the bill were some new tax credits, and some other tax bills that were set to expire were extended.

Here’s a quick summary of the tax breaks found in the bailout bill:

Mortgage debt forgiveness - under previous tax law, if you had any debt forgiven, the cancelled debt was taxable income to you.  The new law temporarily stops homeowners from owing tax on cancelled debt up to $2 million.  The debt has to be related to your primary residence.  This is actually an extension on a law that was set to expire; the new law will extend this provision until 2012.

Lower property taxes - homeowners who don’t itemize their deductions will be able to deduct up to $500 ($1,000 for joint taxpayers) of personal property taxes in addition to the standard deduction.  This is effective for 2008 and 2009.

Continue Reading Bailout Plan Includes Tax Breaks Too

Don’t forget that October 15 is the final deadline for filing your 2007 tax return. In addition, it’s your last chance to file for the economic stimulus rebate check.

As a reminder, if you file a 2007 federal income tax return, and have $3,000 or more of qualifying income (including amounts received from Social Security and certain veterans benefits) you may be eligible for a stimulus payment. Other criteria that you must meet: you must have a valid Social Security number and you can’t be claimed as a dependent by someone else.

In recognition of recent gasoline price increases, the IRS has raised the standard mileage rate for the final six months of 2008.

The rate will increase to 58.5 cents a mile for all business miles driven from July 1, 2008, through December 31, 2008. The rate for the first half of 2008 is 50.5 cents.

The IRS normally updates the mileage rates once a year, but given the significant increases in gas prices this year, the IRS has made a special rate increase in the middle of the year.

I was recently interviewed by Cara of The Household Helper about getting your tax and financial records organized NOW for next year.

Some of the tips we talked about include…

- Create a system NOW: a folder for 2008 taxes where you can easily insert paperwork related to your taxes.

- Rule of thumb: keep copies of anything you will be deducting for 7 years. Keep the tax return as well as the back-up for that return.

- If you are NOT deducting things like utility bills or credit card bills, you DO NOT need to keep those statements (I usually keep them until I know the last check/payment cleared).

If you’re like me, tax season is exhausting and stressful, especially if you owe Uncle Sam. The deadline is past, but you may still wonder if you paid too much or if you missed any deductions that could have saved you money. Well the best way to avoid that overtaxed feeling (pun intended) is to get a jump on next year’s taxes now.

Here are a few smart tax moves you can do now to make next year’s tax season less painful:

Get organized: If your tax filing system consists of shoeboxes and shopping bags, now is a good time to move your finances to your computer. You still need to save key receipts and documents, but entering spending, savings and investment information into a program like Quicken or Microsoft Money (whichever is easier for you to use), will not only give you a clearer idea of your finances, but it will make your tax filing process much easier for your tax professional or if you do it yourself.

Continue Reading Get a Jump on Next Year’s Taxes Now

The IRS started sending rebates out on Monday April 28.

If you haven’t gotten yours yet, or you’re just wanting to check to see when you can expect to receive it, the IRS has added a “Where’s My Rebate” feature to their website.

This is an interactive feature that allows you to enter your
personal information (Social Security number, filing status, and number
of exemptions on your 2007 tax return) to find out the status of your
rebate.

You can also review the payment schedule and visit the Economic Stimulus Payments Information Center for more information about the rebate check.

Okay… you know the IRS will start sending out rebate checks in May. But when will you get YOUR check?

The first rebate checks will be mailed out starting on May 2, and will be
based on the final two digits of your Social Security number, as well
as when you file and whether you elected to receive any refund by
direct deposit or snail mail.

The IRS says most people will get
their checks by July 11, but if you want to know exactly when to expect
your rebate, here are the details:

Continue Reading IRS Will Start Sending Rebates On May 2

Got questions about the tax rebate?  I have created a comprehensive guide about the 2007 tax rebate, where I answer all of your tax rebate questions, such as…

• Who qualifies for the tax rebate?
• How much will I get?
• When will I receive my check?

I’ve also posted articles about how to get the most out of your rebate check, what you need to do to get your check, and other issues, such as what happens if you owe back taxes, and tax rebate scams to watch out for.

Garrett Planning Network Provides Thirteen Smart Ideas

(Lee’s Summit, MO) February 24, 2008 - After concluding their tax
preparation activities, many people will see that they are entitled to
a refund from Uncle Sam. “Whether you refund is large or small, you are
wise to determine now what you will do when that check arrives,” says
Sheryl Garrett, CFP®, author of Personal Finance Workbook For Dummies®
(Wiley, November 2007) and founder of the Garrett Planning Network (www.GarrettPlanningNetwork.com). “Don’t fritter it away or spend it on a whim.”

On a recent teleconference, network members brainstormed thirteen ways taxpayers can put this “found money” to work:

1. Put the entire amount, up to the maximum allowed by law ($4000
for an individual in 2007 unless you are age 50+, then the maximum
contribution is $5000; $5000 for an individual in 2008 unless you are
age 50+, then the maximum is $6000), into a Roth IRA assuming your
income falls below the government thresholds (the phase out for singles
in 2007 is $99-$114,000 and in 2008 it’s $101-116,000; for married
couples in 2007, the phase out is $156-166,000 and in 2008, it’s
$159-$169,000).

Continue Reading What to Do With Your Tax Refund or Other “Found Money”

By now you’ve most likely heard about the tax rebate that was passed by President Bush last week, with the intention of jump-starting the economy.

But what you may not know is that you have to file your 2007 tax return before you can get your rebate check.

This was not good news to me, because I’m one of those people who waits until October to file (hey, I don’t get paid to file my tax return, and paying clients come first!).

It also means my workload this tax season will be quite a bit heavier because all of my usual stragglers will be getting their tax info in on time this year to make sure they get their rebate checks (sigh…).

Okay, back to the rebate… If you haven’t heard the details yet, here they are:

The IRS is expecting to start mailing out checks in May.

Continue Reading You Have to File Your Taxes Before You Can Get Your Rebate