Dear Friends of Our Firm,
The Emergency Economic Stabilization Act of 2008—informally called the “bailout law” in the media—extends a wide variety of tax breaks that had expired after 2007. Generally, the extensions continue through 2009.
There are several strategies that may provide benefits for taxpayers under the new law. For example:
• Pay next semester’s tuition. Under the bailout law, the above-the-line deduction for qualified higher education expenses is restored.
• Buy a ‘big-ticket’ item. The new law reinstates the optional deduction for state and local sales taxes. Even if you use the IRS tables, you can tack on the sales tax for certain big-ticket items.
• Give to charity from your IRA. If you’re age 70½ or older, the tax law allows you to transfer contributions of up to $100,000 from an IRA to a charity without incurring any tax.
• Add on property tax deductions. Earlier this year, the new housing law authorized a one-time property tax deduction for nonitemizers. Now the bailout law extends the special deduction for another year.
• Resume business research activities. The new bailout law revives the tax credit for qualified research activities conducted by a business. In addition, it enhances the alternative simplified credit while repealing the alternative incremental credit.
• Claim faster building write-offs. Generally, it takes 39 years to write off the cost of most building improvements. However, Congress previously authorized a 15-year write-off period for qualified restaurant and leasehold improvements. The bailout law extends this tax treatment through 2009.
• Donate business goods to charity. The new law revives enhanced deductions for donations of food, books and computers through 2009.
Of course, this is only an overview of provisions in the new law that may work to your tax advantage. For more information, call us at (618) 542-9127 to set up a meeting.
P.S. We can help you develop a personalized plan geared to your particular situation. Call (618) 542-9127 before the end of the year.
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