Disclaimer of Liability
The information in this e-newsletter is for general guidance only, and does not constitute the provision of legal advice, tax advice,
accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used
as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or
taking any action, you should consult a professional advisor who has been provided with all pertinent facts relevant to your particular
situation.
The author of the tax articles in this e-newsletter did not intend nor write the advice to be used to avoid any penalty imposed by a
taxing authority, nor may any user/recipient of this document use this document's written tax advice for that purpose. This document's
tax advice was written specifically to support the promotion or marketing of the transaction/matter addressed by the written tax advice.
Therefore, any user/recipient of this document should seek an independent tax professional's advice regarding the user/recipient's
particular circumstances.
The information is provided "as is" with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and
without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for
a particular purpose.
The information in this e-newsletter is for general guidance only, and does not constitute the provision of legal advice, tax advice,
accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used
as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or
taking any action, you should consult a professional advisor who has been provided with all pertinent facts relevant to your particular
situation.
The author of the tax articles in this e-newsletter did not intend nor write the advice to be used to avoid any penalty imposed by a
taxing authority, nor may any user/recipient of this document use this document's written tax advice for that purpose. This document's
tax advice was written specifically to support the promotion or marketing of the transaction/matter addressed by the written tax advice.
Therefore, any user/recipient of this document should seek an independent tax professional's advice regarding the user/recipient's
particular circumstances.
The information is provided "as is" with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and
without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for
a particular purpose.
| Serving the Central Pennsylvania area since 1981 |
| Robert A. Romako, CPA |
| IMPORTANT HIGHLIGHTS OF THE EMERGENCY STABILIZATION ACT OF 2008 |
On October 3, President Bush signed the Emergency Economic Stabilization Act, whose principal
purpose was to restore credit markets in the United States. This massive Act included many
income tax provisions affecting businesses and individuals. This special article highlights some of
the tax provisions having the widest application to my readers. In an effort to get you this
information as soon as possible, not all the special tax provisions are included.
1. Alternative Minimum Tax relief. The AMT exemption was extended for one additional
year (i.e., 2008). You may recall reading how Congress was implored to extend the AMT
exemption, or else force millions of additional taxpayers to be faced with this additional tax. So,
Congress will need to revisit this issue again next year. However, what is interesting is that the Act
allows certain credits, including those for adoption, Hope and lifetime learning, nonbusiness
energy, and solar credits to offset the AMT for the first time. Taxpayers who were subject to the
AMT but who did not track these potential credits in the past may want provide this information to
their tax preparer in 2008.
2. The itemized deduction for sales tax if greater than state and local income taxes has
been extended through 2009.
3. The deduction for college tuition expenses above-the-line has been extended
through 2009. This deduction is $4,000 for an individual whose adjusted gross income does not
exceed $65,000 ($130,000 for joint filers) or $2,000 if adjusted gross income does not exceed
$80,000 ($160,000 for joint filers).
4. The $250 deduction for teacher’s supplies is extended through 2009.
5. A new tax break in 2008 was the additional deduction for real estate taxes for
nonitemizers (those claiming the standard deduction instead of itemizing). Existing law gives
nonitemizers an additional deduction of $500 for real estate taxes paid ($1,000 for joint filers).
The new Act extends this to 2009.
6. The ability to give up to $100,000 from IRA distributions to charity has been
reintroduced for 2008 and 2009. This provision had expired in 2007. Important: this is an
excellent planning opportunity for those who need to take required distributions from IRA’s and
who are inclined to make charitable gifts. You should talk to your tax advisor as soon as possible
to review this option for 2008.
7. The energy credits for solar and geothermal energy equipment have been
extended through 2016. The Act also adds wind energy to the list of equipment eligible for credits.
8. The residential energy credits for home energy improvements (insulation, windows,
thermal doors, roofs, heat pumps, etc. has been extended through 2009.
9. Beginning in 2011, brokers must report to the IRS the cost basis, sales proceeds,
and gain/ loss on sale for all securities sold. If you have transferred securities to your broker
and have not furnished cost basis information, be sure to do this before the information reporting
requirements take place.
As I stated earlier, these points highlight only the most widely- applicable changes in the tax law.
Please give me a call if you have any questions about these provisions or how they might apply
to you.
purpose was to restore credit markets in the United States. This massive Act included many
income tax provisions affecting businesses and individuals. This special article highlights some of
the tax provisions having the widest application to my readers. In an effort to get you this
information as soon as possible, not all the special tax provisions are included.
1. Alternative Minimum Tax relief. The AMT exemption was extended for one additional
year (i.e., 2008). You may recall reading how Congress was implored to extend the AMT
exemption, or else force millions of additional taxpayers to be faced with this additional tax. So,
Congress will need to revisit this issue again next year. However, what is interesting is that the Act
allows certain credits, including those for adoption, Hope and lifetime learning, nonbusiness
energy, and solar credits to offset the AMT for the first time. Taxpayers who were subject to the
AMT but who did not track these potential credits in the past may want provide this information to
their tax preparer in 2008.
2. The itemized deduction for sales tax if greater than state and local income taxes has
been extended through 2009.
3. The deduction for college tuition expenses above-the-line has been extended
through 2009. This deduction is $4,000 for an individual whose adjusted gross income does not
exceed $65,000 ($130,000 for joint filers) or $2,000 if adjusted gross income does not exceed
$80,000 ($160,000 for joint filers).
4. The $250 deduction for teacher’s supplies is extended through 2009.
5. A new tax break in 2008 was the additional deduction for real estate taxes for
nonitemizers (those claiming the standard deduction instead of itemizing). Existing law gives
nonitemizers an additional deduction of $500 for real estate taxes paid ($1,000 for joint filers).
The new Act extends this to 2009.
6. The ability to give up to $100,000 from IRA distributions to charity has been
reintroduced for 2008 and 2009. This provision had expired in 2007. Important: this is an
excellent planning opportunity for those who need to take required distributions from IRA’s and
who are inclined to make charitable gifts. You should talk to your tax advisor as soon as possible
to review this option for 2008.
7. The energy credits for solar and geothermal energy equipment have been
extended through 2016. The Act also adds wind energy to the list of equipment eligible for credits.
8. The residential energy credits for home energy improvements (insulation, windows,
thermal doors, roofs, heat pumps, etc. has been extended through 2009.
9. Beginning in 2011, brokers must report to the IRS the cost basis, sales proceeds,
and gain/ loss on sale for all securities sold. If you have transferred securities to your broker
and have not furnished cost basis information, be sure to do this before the information reporting
requirements take place.
As I stated earlier, these points highlight only the most widely- applicable changes in the tax law.
Please give me a call if you have any questions about these provisions or how they might apply
to you.
| Robert A. Romako, CPA Phone:717.774.3047 |
OCTOBER 2008