February 2008
Dear Clients and Friends:
2008 Business Rate changes
|
Item |
2007 |
2008 |
Change |
|
Annual Gift Tax Exclusion |
$12,000 |
$12,000 |
No Change |
|
Standard Mileage Rate for Business |
$0.485 |
$0.505 |
$0.020 |
|
Charitable mileage rate |
$0.145 |
$0.145 |
No Change |
|
Social Security earnings limit age 62 to calendar year before turning 65 & 10 months |
$12,960 |
$13,560 |
$600 |
|
Social Security earnings limit in calendar year you turn 65 & 10 months |
$34,680 |
$36,120 |
$1,440
|
|
Nanny earnings limit with no W-2 |
$1,500 |
$1,600 |
$100 |
|
Kiddie tax applies to earnings over |
$1,700 |
$1,700 |
No Change |
|
Kiddie tax applies to children and full time students under age |
18 |
24 |
6 |
|
Minimum Medicare Part B tax |
$1,122 |
$1,157 |
$35 |
|
Maximum 401K |
$15,500 |
$15,500 |
No Change |
|
Maximum 401K if 50 yrs or older |
$20,500 |
$20,500 |
No Change |
|
Maximum IRA |
$4,000 |
$5,000 |
$1,000 |
|
Maximum Ira if 50 yrs or over |
$5,000 |
$6,000 |
$1,000 |
|
Maximum SEP |
$45,000 |
$46,000 |
$1,000 |
|
Expensing of business equipment ** |
$112,000 |
$128,000 |
$16,000 |
|
FICA Rate |
7.65% |
7.65% |
No Change |
|
FICA Wage limit |
$97,500 |
$102,000 |
$4,500 |
|
SDI Rate |
0.6% |
0.8% |
0.2% |
|
SDI Wage limit |
$83,389 |
$86,698 |
$3,309 |
|
Alternative minimum tax exemption – Joint |
$62,500 |
$66,250 |
$3,750 |
|
Alternative minimum tax exemption – Single |
$42,500 |
$44,350 |
$1,850 |
If you do not qualify for the entire rebate based on your 2007 tax return, you get a second chance at the rebate next year based on your 2008 tax return.
Dependents, non-resident aliens, estates and trusts are not entitled to the rebate. However, a taxpayer who died during 2007 is entitled to the rebate.
Phase out of rebate for “high income earners” starts at $75,000 of adjusted gross income ($150,000 on a joint return). The phase out is 5% of the amount exceeding that phase out limit.
The stimulus package also included business incentives:
· **Small business expensing of equipment bought during 2008 increases from $128,000 to $250,000. This applies to tax years beginning in 2008 for those not on a calendar year.
· 50% bonus depreciation on 2008 asset purchases for which the business did not use the expensing. The tax rules must provide a life of 20 years or less for the property to qualify. This would include equipment, land improvements and qualified leasehold improvements, but not residential or commercial real property.
· First year depreciation on a luxury business car (cost over $15,000!!!!!) bought during 2008 from $3,060 to $11,060
The final change made by the stimulus package was to increase the maximum loan amount for a conforming loan from $417,000 to $729,750 (it could be less depending on the average sales price of homes in your county). Conforming loans typically get a better interest rate. This would apply to home purchases or refinances originating between July 1, 2007 and December 31, 2008.
2008 could be the last year of lower taxes
Check out our web sites:
www.cfoplus.net This has the more favorable older photos of some of us
www.marinbookkeepers.org No photos, but a good read if you need a bookkeeper. Ask us if you are looking for a bookkeeper.
Please call us if you have any questions about the issues and facts we raised or about any other tax, business or financial planning issue.
~Your partners in financial success~
~Visit our website at www.morrecpa.com~
