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Preparing for Your 2008 Tax Return

October 22, 2009



(NewsUSA) – As tax season swings into full force, it's common
to let your tax documents pile up while you sit back and wonder where to start.

If you are one of the millions of taxpayers who puts doing your taxes on the back burner,
the first rule is to not panic. Your next steps should be to locate all of your tax documents and
gathering them in a secure location. You should also consider preparing your tax return with
software. Tax software, on-line or installed on your home computer, does more than calculate the
financial data you enter.

According to Leigh Aragon, spokeswoman for 2nd Story Software, Inc., makers of the
popular TaxACT tax-preparation software and Web-based services, "One of the most important benefits
that tax software provides is that it is current on all of the tax law changes. With our thorough
interview format and tools for maximizing deductions, software like TaxACT reduces the likelihood
for errors to occur, and expedites the preparation process."

Every year, there are changes in tax law that may affect your tax liability. Here
are some important tax changes that took effect in 2008.

-Economic stimulus payment: Any economic stimulus payment you received is not taxable
but reduces your recovery rebate credit.

-Recovery rebate credit. If you did not receive the full economic stimulus payment,
you may be able to claim the recovery rebate credit.

-First-time homebuyer credit. If you bought your main home after April 8, 2008, and
are a first-time homebuyer, you may be able to claim this credit.

-Standard mileage rates increased. For 2008, the standard mileage rate for the cost
of operating your car for business use is 50.5 cents per mile (58.5 cents per mile after June 30,
2008).

-Capital gains rate reduced: the 5 percent capital gain tax rate is reduced to
zero.

-Limits on itemized deductions. Some of your itemized deductions may be limited if your
adjusted gross income is more than $159,950 ($79,975 if you are married filing
separately).

-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 increased. You and your spouse, if filing jointly, each may be
able to deduct an IRA contribution of up to $5,000 ($6,000 if age 50 or older at the end of
2008).

-Tax relief for Kansas and Midwestern disaster areas. Temporary tax relief was enacted
as a result of storms, tornadoes and flooding in affected areas.

-Earned income credit (EIC). The maximum amount of income you can earn and still get EIC
increased. The amount depends on your filing status and number of children. The maximum amount of
investment income you can have and still be eligible for the credit increased to $2,950.

Need specific tax tips and advice? Visit www.irs.gov/newsroom to review the latest changes and tax
tips available. More information regarding TaxACT can be found by visiting www.TaxACT.com.

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