3 Important Tax Changes for 2008

3 Important Tax Changes for 2008

Three tax law changes that you should consider before filing your federal tax return for the 2008 tax season. Some tax breaks have been renewed, the standard deduction has been increased, contribution limits have risen for many retirement participants.

1. Tax Breaks Renewed

You can still take a tax break for the state and local taxes that you paid during the tax year on your federal return. If you are an educator, you can take a deduction of supplies you purchased on the front page of form 1040. And students can still take deductions for tuition and fees paid during 2008 on their tax return.

2. Your Standard Deduction is increased in most cases.

Increases in the standard deduction happened for many groups. For married couples and widows the new deduction is $10,900. For Singles and Couples filing separately, the deduction has been raised to $5,450. And finally heads of households can take a standard deduction of $8,000.

3. The amount you can earn and still contribute to your retirement account has increased.

If your modified income for 2008 is below $53,000 for singles and $63,000 for heads of household, then you can take a tax deduction for IRA contributions even if you have a 401k or 403b plan at work. And joint filing couples can earn up to $85,000 before you begin to be phased out.

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