1040 Tax Return

Economic stimulus payment: Any economic stimulus payment you received is not taxable for federal income tax purposes but reduces your recovery rebate credit.

Recovery rebate credit: This credit is figured like last year's economic stimulus payment, except that the amounts are based on tax year 2008 instead of tax year 2007. The maximum credit is $600 ($1,200 if married filing jointly) plus $300 for each qualifying child.

Withdrawal of economic stimulus payment from certain accounts: If your economic stimulus payment was directly deposited to a tax-favored account and you withdraw the payment by the due date of your return (including extensions), the amount withdrawn will not be taxed and no additional tax or penalty will apply. For a Coverdell education savings account, the withdrawal can be made by the later of the above date or June 1, 2009.

Alternative minimum tax (AMT) exemption amount increased: The AMT exemption amount is increased to $46,200 ($69,950 if married filing jointly or a qualifying widow(er); $34,975 if married filing separately).

IRA deduction expanded. You and your spouse, if filing jointly, each may be able to deduct up to $5,000 ($6,000 if age 50 or older at the end of the year). You may be able to take an IRA deduction if you were covered by a retirement plan and your 2008 modified adjusted gross income (AGI) is less than $63,000 ($105,000 if married filing jointly or qualifying widow(er)). If your spouse was covered by a retirement plan, but you were not, you may be able to take an IRA deduction if your 2008 modified AGI is less than $169,000.

Standard deduction increased by real estate taxes and net disaster losses. Your standard deduction is increased by: Certain state or local real estate taxes you paid, and A net disaster loss attributable to a federally declared disaster.

First-time homebuyer credit: If you bought a main home after April 8, 2008, and before July 1, 2009, and did not own a main home during the prior 3 years, you may be able to take this credit.

Rollovers to Roth IRAs. You can rollover distributions from an eligible retirement plan to a Roth IRA. The rollover is not tax-free.

Standard mileage rates: The 2008 rate for business use of your vehicle is 501/2 cents a mile (581/2 cents a mile after June 30, 2008). The 2008 rate for use of your vehicle to get medical care or to move is 19 cents a mile (27 cents a mile after June 30, 2008).

Earned income credit (EIC). You may be able to take the EIC if: A child lived with you and you earned less than $38,646 ($41,646 if married filing jointly), or A child did not live with you and you earned less than $12,880 ($15,880 if married filing jointly).

The maximum AGI you can have and still get the credit also has increased. You may be able to take the credit if your AGI is less than the amount in the above list that applies to you. The maximum investment income you can have and still get the credit has increased to $2,950.

Personal exemption and itemized deduction phaseouts reduced. Taxpayers with adjusted gross income above a certain amount may lose part of their deduction for personal exemptions and itemized deductions. The amount by which these deductions are reduced in 2008 is only 1/2 of the amount of the reduction that otherwise would have applied in 2007.

Tax rate on qualified dividends and net capital gain reduced. The 5% tax rate on qualified dividends and net capital gain is reduced to zero.

Tax on child's investment income. Form 8615 is required to figure the tax for a child with investment income of more than $1,800 if the child:
1. Was under age 18 at the end of 2008,
2. Was age 18 at the end of 2008 and did not have earned income that was more than half of the child's support, or
3. Was a full-time student over age 18 and under age 24 at the end of 2008 and did not have earned income that was more than half of the child's support.

The election to report a child's investment income on a parent's return and the special rule for when a child must file Form 6251 also now apply to the children listed above.

For most complete and up to date information see the irs 1040 instructions or visit irs.gov

New IRS e-file Rule July 30, 2007

The IRS has established new e-file rules to enable it to more quickly identify fraud schemes including phishing. These new IRS e-file rules apply to all Authorized IRS e-file Providers, including Online Providers, Intermediate Service Providers, and Electronic Return Originators (EROs) that obtain taxpayer information via the Internet directly or through third parties in order to e-file federal returns.

Whether you use online electronic means to efile your 1040 tax return or a more traditional provider to efile your 1040 tax return make sure they are authorized by the IRS.

For Easy Online Tax Preparation and To Use a Trusted and Longtime Authorized efile provider check out TaxBrain.Com

You cannot deduct a cash contribution, regardless of the amount, unless you keep as a record of the contribution a bank record (such as a canceled check, a bank copy of a canceled check, or a bank statement containing the name of the charity, the date, and the amount) or a written communication from the charity. The written communication must include the name of the charity, date of the contribution, and amount of the contribution.

http://www.irs.gov/formspubs/article/0,,id=177985,00.html

The following tax benefits have expired and will not apply for 2008.

* Deduction for educator expenses in figuring adjusted gross income.
* Tuition and fees deduction.
* Deduction for state and local general sales taxes.
* District of Columbia first-time homebuyer credit (for homes purchased after 2007).
* The election to include nontaxable combat pay in earned income for the earned income credit.
* Nonbusiness energy property credit.

At the time this publication went to print, Congress was expected to consider legislation that would reinstate these benefits. To find out if legislation is enacted, go to www.irs.gov, click on More Forms and Publications, and then on What's Hot in forms and publications.

See Alternative Minimum Tax (AMT) and Charitable Contributions for information on other tax benefits expiring for 2008.

http://www.irs.gov/formspubs/article/0,,id=177993,00.html

As a result of the Tax Technical Corrections Act of 2007, the following instructional changes apply when completing the 2007 Form 1040 (or Form 1040NR). The paper and online versions of Form 1040 (and Form 1040NR) and instructions will not be revised.

* The tax from Form 8889, Part III (relating to health savings accounts) that was to be reported on Form 1040, line 44 (or Form 1040NR, line 41), using checkbox "c" must instead be included in the total on Form 1040, line 63 (or Form 1040NR, line 58), as an additional write-in tax. On the dotted line next to Form 1040, line 63 (or Form 1040NR, line 58), enter "HDHP" and the amount of this tax.
* The additional tax on recapture of a charitable contribution of a fractional interest in tangible personal property that was to be included on Form 1040, line 44 (or Form 1040NR, line 41), must instead be included in the total on Form 1040, line 63 (or Form 1040NR, line 58), as an additional write-in tax. On the dotted line next to Form 1040, line 63 (or Form 1040NR, line 58), enter "FITPP" and the amount of this tax.
* All filers of Forms 2555 or 2555-EZ must figure their tax using the worksheet found in Publication 4655, Supplemental Instructions for 2007 Form 1040 and Form 1040NR.

http://www.irs.gov/formspubs/article/0,,id=177978,00.html

No information on this page is considered tax advice. You should see a tax adviser or professional tax preparer for specific questions and help.

For More Information on Forms and Publications Visit irs.gov and http://www.irs.gov/formspubs/content/0,,id=178012,00.html for tax changes pertaining to individuals for 2007