Date: 2008-01-30

• Mortgage Insurance Premium Deduction: Homeowners can treat their mortgage insurance premium paid for the year as tax deductible, if the premium is paid on a qualifying new mortgage entered into after December 31, 2006 and before January 1, 2011. The mortgage insurance premium deduction could result in a possible increase in itemized deductions. The deduction is reduced by 10 percent for each $1,000 that annual gross income (AGI) exceeds $100,000 for couples who are Married Filing Jointly ($500 reduction for Married Filing Separately on an AGI of $50,000).
  
  For example, a married couple filing jointly, with a household AGI of $101,000, paying a qualified mortgage insurance premium of $5,000 last year, is allowed a mortgage insurance premium deduction of $4,500. This deduction is reportable on Schedule A in the same section as mortgage interest.  

• Mileage Rate Increases: Taxpayers who used their vehicles for job-related purposes in 2007 can deduct $.485 per mile for business mileage. The rate for medical and moving expenses mileage increased to $.20 per mile.  

• Claiming Charitable Contributions: When claiming deductions for monetary donations to a charity, new requirements apply. Even if the contribution is less than $250, taxpayers must now have a bank record or receipt from the organization that clearly shows the date, organization name and amount of each donation.  

• Earned Income Tax Credit Increases: The Earned Income Tax Credit (EITC) helps working taxpayers and families by providing a refundable tax credit, meaning that when the EITC exceeds the amount of taxes owed, it results in a tax refund to those who claim and qualify for the credit. This credit is based on the taxpayer's wages, tips, salary, income from self-employment and other taxable employee compensation. The maximum amount of the credit available has increased in 2007 to $2,853 for one qualifying child (up from $2,747); $4,716 for two qualifying children (up from $4,536); and $428 for taxpayers who can claim the credit but have no qualifying children (up from $412). In addition, the income ceiling has also gone up. You may qualify for some or all of the credit if you make less than the following amounts and file as Single, Head of Household, or Qualifying Widow(er):
  • A Taxpayer claiming no children: $12,590 ($14,590 if Married Filing Jointly)  
  • One qualifying child claimed: $33,241 ($35,241 if Married Filing Jointly)  
  • More than one qualifying child claimed: $37,783 ($39,783 if Married Filing Jointly)  
   
• Standard Deduction Increases: The IRS has increased the standard deduction amounts for those who do not itemize. Starting in 2007, the increases are as follows:
  • For taxpayers filing as Single or Married Filing Separately: $5,350  
  • For Head of Household: $7,850  
  • For Married Filing Jointly and Qualifying Widow(er): $10,700  
  • The additional standard deduction amount for taxpayers age 65 or older or for blind taxpayers increases to $1,300 (for Single and Head of Household) and to $1,050 for Married Filing Jointly, Married Filing Separately and Qualifying Widow(er).