2008 Tax Planning Guide

Click Here for the 2008 Tax Planning Guide

Tax planning has always been important.  And now more than ever due to the complexity of the federal tax law and the new tax legislation that has been enacted over the past several years.   The way to overcome the complexity of your situation is to plan ahead.  Planning is an essential element that will allow you to better understand your financial health as well as properly implement tax saving strategies that can impact you today as well as in the future.

The Tax Planning Guide contains many key developments including:

• The 5% tax rate on net capital gains and qualified dividend income for tax year 2007 drops to 0% for 2008.  This means that gains and dividends that otherwise would be taxed in the two lowest ordinary tax brackets (10% and 15%) will not be subject to federal income tax.  The 0% rate is scheduled to continue through tax years 2009 and 2010. (pgs. 4-5)

• The “kiddie tax” provisions now apply to many college-age children with investment income. (pg. 6)

• Alternative Minimum Tax (AMT) schedule for tax year 2007 was revised when Congress passed an AMT patch which raised the exemptions.  The new exemptions* are as follow:

 

Single, Head of Household           $44,350

 

Married Filing Jointly                  $66,250

 

Married Filings Separately           $33,125

 

*Page 9 of this Guide shows the amounts in effect prior to the law being passed by Congress on December 19, 2007.

• The contribution limit for individual retirement accounts (both traditional and Roth) increases to $5,000 for 2008.  A “catch up” provision permits an additional contribution of up to $1,000 by individuals who are at least age 50 in 2008. (pgs. 10-12)

 The planning opportunities discussed in the guide are general in nature. Because they may or may not be appropriate for your specific situation, you should obtain professional advice before you act on any of them.  We are here to assist you with these matters and look forward to serving you.  Please contact us with any questions or concerns.

Click Here for the 2008 Tax Planning Guide