Time running short for 2007 tax moves

The tax filing season is just around the corner. According to Mark Green, an IRS spokesman in Georgia, taxpayers can take the first step now by organizing, planning and reviewing tax law changes featured on the IRS Web site, www.irs.gov. Green says a little advance planning could save taxpayers time - and perhaps even money - later. He also advises "not to file next year's tax return before December 31st, using your last paycheck stub!"

Within a few months, I'll be scrambling to file my 2007 federal tax return. What can I do now to make things easier at tax filing time?

.. If you don't already have a record keeping system, start one now. It can be as simple as file folders or a shoe box. Go through all your records and put everything that relates to your 2007 taxes in one place. You can avoid headaches at tax time by keeping track of your receipts and other records throughout the year.

.. In most cases the IRS does not require you to keep records in any special manner. You should keep any and all documents that may have an impact on your federal tax return. Such items would include bills, receipts, invoices, mileage logs, canceled checks, or any other proof of payment, and any other records to support deductions or credits you claim on your tax return.

.. Generally, tax records should be kept for three years, but some documents, for example, records relating to a home purchase or sale, stock transactions, IRAs and business or rental property, should be kept longer

Charitable Contributions deductions. What are the rules for taking a deduction?

.. If you plan to donate and deduct your contribution for 2007 as an itemized deduction, you should be aware of the new law for contributions. Charitable contributions can be tax deductible, but you must have the proper records to support your deduction. Make charitable contributions you want to deduct for 2007 no later than Dec. 31. Remember that due to recent law changes, to deduct a charitable cash donation, regardless of the amount, you must have a bank record or a written communication from the charity showing the name of the charity and the date and amount of the contribution. Also, remember that donations of used items such as clothing and furniture are no longer deductible unless they are in good condition.

.. Remember that charitable donations charged to a credit card by Dec. 31 are deductible for 2007 even though you pay the credit card bill in 2008.

.. If you are at least 70 ½ years old, you can make a tax-free transfer of up to $100,000 directly from an IRA to a tax-exempt charity by Dec. 31. This law is set to expire after 2007.

I gave my son quite a bit of money this year. Will my son or I have to pay tax on this?

.. For 2007, taxpayers may make gifts of up to $12,000 per person and exclude the amount from gift tax. Those receiving the gift are not required to pay taxes on the amount received.

.. Each person can give $12,000 a year to any person without having to file a gift-tax return with the IRS. If you have several children, you can give $12,000 a year to each. A married couple can "bundle" their gifts to give a combined $24,000 to each child ($12,000 per spouse).

I've installed new windows and doors at my home. Are there any tax breaks out there for people making these types of home improvements?

.. During 2006, individuals can make energy-conscious purchases that will provide tax benefits when filling out their tax returns next year. The new law provides tax credits for making your principal residence, which must be in the U.S., more energy efficient and for buying certain energy efficient items.

.. People who purchase and install products such as energy-efficient windows, insulation, doors, roofs and heating and cooling equipment could receive a tax credit of up to $500.

Do you itemize deductions?

.. Many who take the standard deduction each year could save on their taxes just by taking a little time to add up their mortgage interest, real estate taxes, charitable contributions and other expenses that count as itemized deductions.

I have an IRA. How much can I contribute this year?

.. In most cases, expenditures must take place during the tax year in order to be deductible. However, taxpayers do have time next year (until April 15, 2008) to contribute to their Individual Retirement Arrangements/ Accounts (IRAs). The maximum IRS contribution for the 2007 tax year is $4,000. If you are age 50 or over by December 31, 2007, you can contribute up to $5,000.

I do a lot of driving for business. How much can I deduct for the miles I drive for work?

.. The rates for miles driven between January 1 and December 31, 2007 are:

- 48.5 cents a mile for business mileage.

- 20 cents a mile for medical or moving mileage.

- 14 cents per mile for providing services for charitable organizations. This amount is set by statute.

.. Mileage rate are usually set annually and the new mileage rates for the upcoming calendar year normally come out in November.

.. Good record keeping is the key to ensuring that you can deduct your mileage expenses.

Electronic Filing - Where you one of them?

The 2007 level is up again! Of the 139.3 million returns filed in 2007, 79.98 million or about 57.4 percent were filed electronically. Nearly 2.6 million Georgians e-filed their 2006 tax returns. Were you one of them? E-filing is fast, easy, safe and for many people it's free online through the IRS Web site.

Can I amend Last Year's Tax Return?

.. Several tax breaks extended for tax years 2006 and 2007 include the state sales tax deduction (versus state income tax deduction), the deduction for teachers' out-of-pocket expenses, and the college tuition and fees deduction. If you qualified for any of these tax breaks but did not request these deductions on your filed 2006 tax return you are encouraged to file an amended tax return (Form 1040X). Also, keep these deductions in mind when you prepare your 2007 tax return. For more information go to the IRS.gov Web site and type "Extenders" in the key word search feature.

.. Don't overlook the Telephone Excise Tax Refund. In Georgia, 29 percent of filers did not request this refund. If you were entitled to request this one time only refund but did not do so you can still submit an amended tax return (Form 1040X) by completing line 15. Taxpayers can request the standard amounts ranging from $30 to $60 without having to dig through old phone bills. Although you do have the option to request the actual long-distance excise tax paid.

.. The standard amounts are based on the total number of exemptions claimed on the 2006 federal income tax return. The standard amounts are $30 for a person filing a return with one exemption, $40 for two exemptions, $50 for three exemptions and $60 for four or more exemptions. Those who paid the long-distance tax on service billed via a landline, cell phone, Voice over Internet Protocol (VoIP), or bundled service after Feb. 28, 2003 and before Aug. 1, 2006 are eligible for a refund. The IRS also established a special short form (Form 1040EZ-T) for those who didn't need to file a regular 2006 return.

I got married in June of this year and changed my name. Is there anything I need to do before I file my tax return next year?

There are a few things you should do now to avoid problems (including delayed refunds) when filing your 2006 tax return. You must provide correct names and identification numbers to claim personal exemptions or the Earned Income Tax Credit. If you changed your name upon marriage (or divorce), contact the Social Security Administration to update their information and your Social Security card. IRS matches information on the tax return with Social Security Administration information. You want to make sure the information on your tax return (with your new name) matches the information provided by Social Security.

.. If you moved after getting married (or divorced), notify the U.S. Postal Service (so they will be able to forward any IRS correspondence). The Postal Service provides updated address

Information to the IRS; however, you should also notify the IRS directly by

sending Form 8822, Change of Address. This form is available on the IRS Web site at www.irs.gov or by calling 1-800-829-3676.

.. When it comes time to file your 2007 tax return, newly married taxpayers may find that they now have enough deductions to itemize on their tax return. Amounts paid for medical care, mortgage interest, charitable contributions, casualty losses and certain miscellaneous costs can reduce your taxable income and lower your tax bill. Keep all your records and check to see whether is more advantageous to file your tax return claiming the standard deduction or to itemize your deductions.

.. Your marital status on December 31 determines whether you are considered married for that year. Married persons may file their federal tax return either jointly or separately. Choosing the right filing status may save you money.

I'm not sure I've had enough tax withheld from my pay checks this year. Is there anything I can do to avoid owing money when I file my 2007 tax return?

.. If you think that you haven't had enough tax withheld and will owe money when you file your tax return, you can still adjust your withholding with your employer by completing a new Form W-4, Employee's Withholding Allowance Certificate. You can also make an estimated tax payment. Having enough tax withheld or paid through estimated payments is necessary to avoid an underpayment penalty.

.. If you are self-employed or have income from dividends, interest, rent, gains from the sale of assets, prizes or awards, you may have to pay estimated tax. (See Publication 505 for additional information on withholding and estimated tax payments.)

.. Check Your Withholding Status at IRS.gov - The Internal Revenue Service encourages taxpayers to take a few minutes to check their withholding to make sure what is being taken out of their paychecks matches their projected taxes. On-line assistance is available at the IRS.gov Web site. Click on "IRS Withholding Calculator" on the "Individuals" page. With the help of current pay stubs and a copy of last year's tax form, users can check to see if they are withholding the right amount. Information from this automated calculator can then be used to revise a W-4.

I sold my house and moved this summer. Can I deduct any of the expenses I incurred on my tax return?

.. Your moving expenses may be deductible on your federal tax return if you meet certain tests relating to all three of the following requirements:

- Your move is closely related to the start of work at a new job location;

- You meet the distance test; and

- You meet the time test.

However, if your employer reimburses you for the cost of the move, you may have to include some of the reimbursement in income. (Check out Publication 521, Moving Expenses.)

.. Many people find that home ownership allows them to itemize deductions on their tax returns. If you're a first time homeowner, you should know that mortgage interest, "points" paid to obtain the mortgage, and real estate taxes are deductible expenses that can be itemized to help reduce the amount of taxes you owe. (For more information, see Publication 530, Tax Information for First-Time Homeowners.)

.. If you sell your main home, you may be able to exclude up to $250,000 of gain ($500,000 for married taxpayers filing a joint return) from your federal tax return. This exclusion is allowed each time you sell your main home, but generally no more frequently than once every two years. (See Publication 523, Selling Your Home, for more information.)

How can I get tax information and forms?

.. Tax information, forms and publications are available through the IRS Web site 24 hours a day at www.irs.gov.

.. If you don't have access to the Internet or want to speak with an IRS representative, you may call the IRS toll-free at 1-800-829-1040 for tax information. To order forms or publications, call the IRS at 1-800-829- 3676.