Whether you file estimated taxes quarterly or you are planning ahead for the annual misery, please take note to the following changes in 2008 so you can adjust accordingly. Here are some expiring tax provisions (Publication 17 of the Internal Revenue Service):

• The $250 deduction for educator expenses (k-12) in calculating Adjusted Gross Income (AGI)
• The deduction for qualified tuition and fees
• The itemized deduction for state and local general sales taxes (in lieu of taking an itemized deduction for state and local income taxes paid)
• The credit for non-business energy property
• The election to include non-taxable combat pay in earned income for figuring the earned income tax credit

In addition to the above expiring provisions, there are many other changes to the 2008 tax code, a few relevant ones of which I have listed for readers of this publication:

Standard Deduction: Increasing to $5,450 for single filers ($10,900 for married filing jointly and $8,000 for head of household)

Personal Exemptions: Increasing from $3,400 to $3,500

Mileage Reimbursement Rate: Increasing from 48.5 cents to 50.5 cents

Traditional IRA Limits: Increasing to $5,000 deduction ($6,000 if 50 or older) if AGI is less than $63,000 ($105,000 if MFJ)

AMT Exemption Amounts: Decreasing to $33,750 ($45,000 married filing jointly or $22,500 if married filing separately)…in addition certain credits will no longer be allowed against AMT such as credit for child and dependent care expenses.

Joe McCarthy is Assistant Professor of Accounting and Finance in the MSL program at Roberts Wesleyan College. He is a certified management accountant and holds an MBA from St. John Fisher College. Joe’s areas of expertise include budgeting, cost analysis, and allocation; financial accounting and reporting; personal finance; and tax planning and preparation. In addition, Joe is owner/operator of McCarthy Financial Services. He may be reached at 585.594.6139 or mccarthyj@roberts.edu for additional questions, explanations, or analyses regarding financial information.