By Johnny Jackson
Time is running out for taxpayers to make moves that could help maximize their 2008 income tax return benefits, according to tax officials.
"With less than four weeks left before the tax season begins, you should look for what last-minute actions to take to increase your credits and deductions," said Mark Green, spokesman for the Internal Revenue Service (IRS).
Green said that taxpayers can start preparing their 2008 income taxes now, by reviewing tax law changes and organizing documents necessary for the filing process.
"Now is a good time for taxpayers to take the opportunity and the time to organize their records and look at their past years' tax returns and receipts to make it an easier effort in completing their tax returns," he said. "Advance planning now could save taxpayers time, and perhaps even money, later."
Millions of Georgians have already started planning to file, and millions more are expected to file early in January, during the first weeks of tax season.
The IRS advises that filers who anticipate making charitable contributions any time in the near future should make those contributions by Dec. 31, in order to file for those deductions on their 2008 income taxes.
Donations charged to a credit card by Dec. 31 are still deductible for 2008, even though the bill may be paid in 2009. Taxpayers must, however, itemize their deductions in order to benefit from any credits. They should also obtain receipts for their donations.
"Receipts are important, particularly for those individuals who are making donations in order to receive something back as a write off," Green said. "The most important receipt is when you make a charitable contribution or donation. The second important receipt is whether you give furniture or appliances to a charitable organization."
Those who do give to charitable organizations, in an effort to receive deductions, should make sure they leave a paper trail (no cash) and give to legitimate charities. A list of legitimate, non-profit organizations is available at the IRS web site.
A list of new laws and law extensions are also available on the web site for early filers to consider.
Eligible taxpayers, for instance, will have a chance to claim the Recovery Rebate Credit in 2009, if they did not receive a stimulus payment in 2008. The payment is a part of the Economic Stimulus Act of 2008, which has provided 117 million households with more than $95 billion in economic stimulus payments so far this year.
Also, the Housing and Economic Recovery Act will offer a first-time home buyer credit of up to $7,500 and an additional standard deduction for state and local real property taxes for those who do not itemize deductions.
Several laws have been extended through Dec. 31, 2009, under the Emergency Economic Stabilization Act.
Extended through Dec. 31, 2009, are - the qualified deductions for student tuition and fees, up to $4,000; the state and local taxes that taxpayers can deduct by either income tax or sales tax; the teacher deduction which allows teachers the ability to deduct up to $250 for out-of-pocket classroom expenses; and energy credits that have been extended to eight years for residential energy efficient property.
Taxpayers may be able to take a credit of 30 percent for the cost of qualified solar electric property, solar water heating property, and fuel cell property. Also, dozens of hybrid vehicle makes and models still offer tax credits for original buyers, Green added.
Early filers should be mindful of the mid-year change in gas mileage credits or "business miles" as well, he said.
From Jan. 1, 2008, to June 30, 2008, filers may receive 50.5 cents per mile for business. A 58.5-cent business mileage rate went into effect for July 1, 2008 - Dec. 31, 2008. Beginning Jan. 1, 2009, business miles decrease to 55 cents per mile.
According to Green, more people could take advantage of business miles than perhaps know about the credit. Those traveling between two jobs could benefit from the mileage they collect between the two jobs. Few people know about that potential credit, he said.
On the net:
Internal Revenue Service: