ThomsonReuters (TG:TOC)
Historical Stock Chart
From Oct 2019 to Oct 2024
'Watch for New Changes; They're All in the Details'
NEW YORK, Jan. 28 /PRNewswire/ -- Nothing is certain but death, taxes -- and changes in the tax rules. "Even if you took advantage of every tax break available to you in 2006, you may not be aware of some of the new breaks available for 2007," says Harris Abrams, RIA Senior Tax Analyst from Thomson Tax & Accounting. Keep these new-for-2007 tax changes in mind when you file your return:
1. Mortgage Insurance Deduction.
Some homeowners are entitled to a mortgage interest deduction that is
greater than the mortgage interest they actually paid in 2007. A new
deduction lets homeowners treat mortgage insurance premiums paid in
connection with debt taken to acquire a principal residence and one
other home as if they were deductible mortgage interest. For the
insurance premiums to be deductible on your 2007 return, the mortgage
insurance contract must have been issued in 2007. Eligibility for the
deduction is subject to income limitations, with the deduction phasing
out when adjusted gross income exceeds $100,000 ($50,000 for married
filing separately); no deduction is available for those with adjusted
gross income above $109,000 ($54,500 if married filing separately).
2. New Substantiation Requirements for Charitable Contributions.
Cash contributions have become tougher to deduct. You may now deduct
monetary contributions only if you have a cancelled check, credit card
or other bank receipt, or written acknowledgement from the charity.
Cash contributions that are backed by only your contribution log are
not deductible. Also, contributions of clothing and household items
are deductible only if the items you gave away were in good used
condition or better. "Recent advertising for tax software makes this
look like a less formal process than it actually is," comments Abrams.
3. Funding Your Health Savings Account Just Got Easier.
Beginning in 2007, (1) you can fund your HSA by making a one-time
direct transfer from your IRA to your HSA; (2) qualifying health
flexible spending account (FSA) or health reimbursement arrangement
(HRA) distributions may be rolled over on a one-time-only basis via
direct transfer to an HSA; (3) the maximum deductible contribution is
no longer limited to the annual deductible under the high deductible
plan; (4) for computing the annual HSA contribution, if you are an
eligible individual in the last month of a tax year, you're deemed
eligible during every month of that year (if you remain eligible
during a testing period); and (5) you can take a maximum HSA
contribution of $2,850 for single coverage ($5,650 for family
coverage).
4. What If You Think You're an Employee -- And Your Employer Doesn't?
If you're an employee, but your employer treats you as an independent
contractor -- such as by reporting your income on a Form 1099 instead
of a Form W-2 - you could be stuck paying self-employment tax, which
is twice the amount of social security tax you would pay as an
employee. You can straighten this out by filing new IRS Form 8919
(Uncollected Social Security and Medicare Tax on Wages), which will
let the IRS know that your employer is liable for its share of
employment taxes on your wages (rather than leaving you responsible
for the entire amount). But be sure you really are an employee before
filing Form 8919. If the IRS determines that you're not, you may be
billed for penalties and interest (in addition to the employment tax
you already owe).
5. Don't Believe Everything You Read About the AMT.
"Do not assume you are subject to the alternative minimum tax just
because the Form 1040 instructions say you are," warns Abrams. IRS'
instructions for Form 1040 state that the alternative minimum tax
(AMT) exemption amount -- the amount of income over which you may be
subject to the AMT -- is decreased to $33,750 ($45,000 if married
filing jointly or a qualified widow(er); $22,500 if filing
separately). Fortunately, that's not the case. Congress provided
taxpayers with some relief from these rules, but only after the IRS
forms had been printed. Under the new law, for tax years beginning in
2007, the AMT exemption amounts are increased to: (1) $66,250 in the
case of married individuals filing a joint return and surviving
spouses; (2) $44,350 in the case of unmarried individuals other than
surviving spouses; and (3) $33,125 in the case of married individuals
filing a separate return. In addition, the rule that nonrefundable
personal credits may offset AMT -- which had been scheduled to expire
at the end of 2006 -- has been extended through 2007.
6. Kiddie Tax Change; New Rules Apply to 2008, Not Your 2007 Filing.
A change in the kiddie tax rules has gotten much publicity, but don't
jump the gun on this. The new rules take effect in 2008, so they do
not affect your 2007 return. Starting in 2008, the kiddie tax rules,
which tax certain investment income of taxpayers' children at the rate
that would apply if the income was reported on their parents' return,
applies to 18-year-olds and full-time students up to age 23. However,
the rules only apply to 18-year-olds, and full-time students up to age
23, whose earned income doesn't exceed one-half the amount of their
support. For 2007, the rules apply only to children up to age 17.
7. Even Foreclosure May Have a Silver Lining.
Congress has provided some relief for taxpayers caught up in the
subprime lending crisis: You don't have to pay federal income tax on
up to $2 million of debt forgiven for a mortgage secured by your
principal residence. Previously, forgiven debt generally resulted in
income for the borrower equal to the amount of the debt forgiven.
About The Thomson Corporation
The Thomson Corporation (http://www.thomson.com/) is a global leader in providing essential electronic workflow solutions to business and professional customers. With operational headquarters in Stamford, Conn., Thomson provides value-added information, software tools and applications to professionals in the fields of law, tax, accounting, financial services, scientific research and healthcare. The Corporation's common shares are listed on the New York and Toronto stock exchanges (NYSE: TOC; TSX: TOC).
Thomson Tax & Accounting is a business segment of Thomson and a leading provider of technology and integrated information solutions to accounting, tax and corporate finance professionals in accounting firms, corporations, law firms and government. Thomson Tax & Accounting includes the Professional Software & Services, Corporate Software & Services, and Research & Guidance business groups. RIA (http://ria.thomson.com/) and PPC (http://ppc.thomson.com/) are both brands within the Research & Guidance business.
DATASOURCE: Thomson Tax & Accounting
CONTACT: Nancy Kohler, 1-800-993-7600, ext. 3#, , or
Melissa Lande, 1-800-993-7600, ext. 1#, , both of Lande
Communications, for Thomson Tax & Accounting
Web site: http://www.thomson.com/
http://ppc.thomson.com/
http://www.riahome.com/