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.

Share:

The More Tax Posts tab at the top of this page will take you to, well, more tax posts. You also can search below for a tax topic. 

Latest Posts
The latest Dirty Dozen tax scam list is familiar because too many are still falling for the schemes

March 5, 2026

Tax filing season is also peak time for tax scams. Be on the lookout for…

Read More
Hello Tax Season 2026

Happy New Tax Year! Are you ready to file your 2025 tax return? I know, too early to ask. But Tax Day 2026 will be here before we realize it. The Internal Revenue Service deadline to file and pay any tax we owe is the regular April 15 date this year. It’s also Tax Day for most of the states that collect income taxes from their residents, which is most of the states! If that seems too far away right now, don’t worry. As is the case every tax season, the ol’ blog’s tips and other tax reminders should help all of us meet our state and federal responsibilities. Procrastinators also will want to keep an eye on the countdown clock just below. It tracks how much time we have until April’s Tax Day, just in case we put off our annual tax task until the absolutely final hours and decide we need to instead get an extension request into the IRS by that date. (Note: I’m in the Central Time Zone, so adjust accordingly for where you live.)

Comments
Leave the first comment