Tackling Taxes: Use the Last Days of '07 to Affect '08
2008 is days away. Get your taxes in order before year's end.
Dec. 27, 2007 — -- Tax time is here again. Get out your calculators, organize your receipts and take note — Mellody has some last-minute tips to help you minimize the pain.
Yes, the elephant in the room this year for taxpayers is the dreaded Alternative Minimum Tax — or AMT. The AMT was created in 1969 as a way to prevent the wealthiest individuals from making tax deductions greater than their income tax bill. The problem is, Congress did not adjust the tax for inflation, so every year, more and more people are being hit with the AMT — not just the wealthiest taxpayers. In fact, if the president and Congress cannot agree on a tax bill by the end of the year, 25 million people could feel the wrath of the AMT. The headline: Refund checks will be held up while the IRS tries to figure out who needs to pay the AMT. The delay could affect 38 million refunds totaling more than $87 billion, according to the IRS.
Of all years, this should be the year of accuracy. I always like to tell people to think of Dec. 31 as if it were April 15. Now is the time to gather all your receipts and documents that are necessary to file on time. You can avoid some of the most common snafus — such as a missing Social Security number or signature — by simply taking your time and being thorough. And mistakes can be costly — a missing Social Security number can result in the IRS holding back your refund or even preventing you from taking any number of credits. Remember, while there is a penalty for filing late, there is no penalty for being prepared and filing early.
Yes, some of the tax benefits for making energy-efficient home improvements will expire at the end of this year. The Energy Tax Incentives Act of 2005 established credits of between $500 to $2,000 for homeowners for such things as adding better insulation or sealing a leaky window. So, now is the time to run out to the hardware store and make some simple improvements. Also, for car buyers, time is running out on the credit available for a hybrid vehicle purchase. The IRS mandates that once a car manufacturer sells more than 60,000 models, the credit phases out — and it has already disappeared for the Lexus hybrid. The IRS has a list on its Web Site of hybrid vehicles that still qualify for the credit.
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