.....Advertisement.....
.....Advertisement.....

Be aware of new tax laws before you file

-A A +A
By Johnathan Ryan

Uncle Sam and the state of South Carolina are knocking at the doors of Lancaster County residents again, looking for their share of taxes from 2007.

And of course, there are always new things to be aware of in a new tax season.

Each year, the federal government changes various standard and itemized deduction amounts because of inflationary reasons. New deductions are also added.

One new deduction that some residents may claim on their 2007 tax forms is the alternative motor vehicle credit, which provides credits for those who've bought a hybrid, advanced lean-burn, fuel-cell motor or alternative-fuel vehicle.

More in the news of late was how changes to the alternative minimum tax (AMT) might delay the start of filing.

In December, the U.S. Congress made the AMT inflation-indexed so it wouldn't ensnare true middle-class taxpayers, said Scott Barnes, franchise owner of Jackson Hewitt offices in Lancaster County.

The AMT requires those with $60,000 or more in adjusted income to pay a minimum amount of taxes. It also may limit the amount of deductions they are allowed to take.

Lancaster's Steele Tax Services preparer Stephanie Howell said most of her customers will not fall into the AMT realm, though.

In contrast, many do qualify for the earned income credit, which is for taxpayers who make less than a certain amount of income.

But since these refundable credits have been abused in the past, the IRS plans to pay closer attention to who deserves and doesn't deserve them in 2007.

"The IRS is really cracking down harder on those who say they qualify for this, asking for more proof of documentation," Howell said. "They are even cracking down harder on the preparers."

She said in the past some people got credits for "live-in" children who actually didn't live with them.

EIC amounts have increased this year, and Howell recommends that filers bring Social Security cards, birth certificates and other relevant documents for their children and themselves when they go to their tax preparer's office.

Tax preparers work with customers to determine the best education deduction to claim, such as the Hope Credit or Lifetime Learning Credit, which have seen increases this tax season, but also more income-based restrictions on who can claim them.

Howell said you should also bring tuition and school-expense receipts when visiting your tax preparer.

New this year will be a mortgage insurance premium deduction on Schedule A, which is good for only the 2007 tax year. The full benefits of this deduction will go to those with less than $100,000 in adjusted income.

For business-related driving, individuals can claim up to 48.5 cents per mile, which is up from 44.5 in the 2006 tax year. For medical-related driving, the deduction is 20 cents per mile, up from 18 cents. Charitable-related driving remains at 14 cents per mile.

An array of deductions also exist for job-search related expenses.

One place where you can find a list of many overlooked deductions is Jackson Hewitt's Web site, http://www.jacksonhewitt.com/?ResourcesLibraryTop50.

A faster refund

Most taxpayers, especially those who anticipate a refund, like to file quickly and get their refund check back as quickly as possible. E-filing, or electronic filing, helps make that happen.

The U.S. Congress has mandated that it wants at least 80 percent of filings to be done electronically by 2009, Barnes said. He said customers should be aided by Congress' insistence on e-filing, which is now nearly 54 percent of filings were done last year.

Contact Johnathan Ryan at 416-8416 or jryan@thelancasternews