New year brings twin tax considerations

January 16, 2008

Obviously the main tax thing on all our minds until April 15 is getting our 2007 returns done.

But as tax geeks and faithful readers of the ol’ blog (is that redundant?) know, we also need to think at least a bit about 2008 taxes early in the year, too. The best way to cut or at least keep your tax bill under control is through year-round planning.

So to help out on 2008 taxes, here are some figures to keep in mind.

First and foremost are the tax brackets. Because of inflation, the thresholds increase each year for each filing status. This year they are:

2008_tax_brackets_grafix_2 

Then there’s the always critical deduction issue. On 2008 returns, the standard deduction will be $10,900 for married couples filing a joint return (a $200 increase over 2007); $5,450 for singles and married individuals filing separately (up $100); and $8,000 for heads of household (up $150).

Tax_tip_icon_3Around two-thirds of us take the standard deduction, rather than itemize. The key is to use the one that will get you the bigger tax break. This story looks at some things to think about in making your deduction method decision.

If you find as 2008 goes on that the expenses you can itemize are getting close to the standard amount, consider bunching to get your itemized amounts over the threshold. This story has more on that technique.

Golden Years saving: It’s never too early to think about your retirement. In 2008 you generally can contribute up to $5,000 to a traditional or Roth IRA, $6,000 if you’re age 50 or older.

The contribution amount allowed this year for Roth IRAs begins to phase out for joint filers with incomes greater than $159,000 (up from $156,000) and $101,000 (up from $99,000) for singles and heads of household.

For contributions to a traditional IRA in 2008, the deduction phase-out range for an individual covered by a retirement plan at work begins at income of $85,000 for joint filers (up from $83,000) and $53,000 for a single person or head of household (up from $52,000).

And 401(k) plan participants, as well as public school and tax-exempt organization employees with 403(b) plans, can contribute up to $15,500 to these workplace accounts in 2008, unchanged from 2007.  Individuals age 50 or over can make catch-up contributions of up to $5,000, also unchanged from last year.

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Tax Season 2026 Continues!

We made it. Tax Day 2025 is finally over. For most of us. When the filing season started on Jan. 26, millions who were expecting refunds filed immediately. Most of us got our returns to the Internal Revenue Service by April 15. But plenty of taxpayers also got extensions. They are looking at an Oct. 15 filing deadline.

Those procrastinating filers aren’t a problem. In fact, the IRS appreciates taxpayers who take time to fill out their 1040 forms correctly. It also is grateful that tax submissions are spread out a bit, especially now that the IRS is a leaner agency. Processing returns is easier when they arrive throughout the year instead of in massive bunches.

But enough about Uncle Sam’s tax collection issues. The focus now is on all y’all who filed for extensions, giving you another six months to complete your return. Since your new mid-October due date will be here before you know it, let’s get started now on meeting it.

The ol’ blog is here to help you finish up your extended Form 1040. You can start with January’s tax tips page, which has links to the rest of the year’s tips by-month collections. You also can peruse various tax categories for more tailored advice by clicking on the More Tax Posts drop-down menu at the top of this (and every) page.

And to make sure you don’t miss your new filing deadline, the count-down clock below will let you know just how much time you to file by Oct. 15. At the latest.e. (Note: I’m in the Central Time Zone, so adjust accordingly for where you live.)

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