TAX REBATES

The Economic Stimulus Act of 2008 was signed by the President on Feb 13, 2008. Eligible individuals will receive an amount equal to the lesser of their net income tax liability or $600 ($1200 if married filing jointly). Additional rebates of $300 will be paid for each child of an eligible taxpayer.

Taxpayers must file a 2007 income tax return to be eligible for the rebate.

Form W-2 Due Date

The 2007 Form W-3, Transmittal of Wage and Tax Statements and Copy A of Form W-2, Wage and Tax Statement are due Friday, February 29, 2008.

Mileage Rates

The 2008 mileage rate will be 50.5 cents per mile.

2007 Sales Tax Deduction

The optional itemized deduction for state and local sales and use taxes instead of state and local income taxes is available through 2007

Basis of Inherited Property

Basis of property received from a decedent is its fair market value on the date of decedent's death or if Federal form 706 was filed, the value of the property on form 706. The 706 value is generally also fair market value on the date of the decedent's death but may be different if the estate elected Alternate valuation or Special use valuation.
If Alternate valuation is elected, the basis of property acquired from a decedent is its value six months after death or the date the property was disposed of. Alternate valuation cannot be used to increase basis when no estate tax is due.

LONG TERM CARE INSURANCE

Colorado allows a $150 credit for long term care insurance. This applies to a single individual with federal taxable income of less at $50,000 or to joint returns with federal taxable income of less than $100,000(assuming there are 2 policies or for a joint policy that covers each individual separately).

The allowable amount of long term care insurance can also be deducted as "self employed health insurance".

Other entities can pay for long term care insurance and deduct it just as they do health insurance.

Worthless Stock Deduction

If you own stock which becomes totally worthless, you can report the loss on Form 1040, Schedule D, as if the stock was sold on the last day of the tax year. You must keep records substantiating the loss for 7 years.

Real Estate taxes (Colorado)

In a year when one buys/sells a home, real estate taxes are deducted as follows:
Seller-
Taxes paid at closing are deductible along with taxes paid earlier in the year (if any).
Buyer-
Buyer receives a credit for taxes that the seller paid. Buyer reduces their deduction in the next year by this credit allowed at closing. Buyer has no real estate tax deduction in the year of purchase.

MORTGAGE INSURANCE PREMIUM DEDUCTION

New for 2007, qualified mortgage insurance premiums will be deductible like deductible mortgage interest.

Rollovers

An employee who is eligible to receive a lump sum distribution from a retirement plan can elect to roll over the lump sum distribution to an IRA or to another qualified plan. This rollover is tax-free and further defers the tax on the lump sum while allowing continual tax-free buildup. In almost every instance, the best way to accomplish the rollover is through a direct, trustee-to-trustee transfer, in which the money moves directly from one financial institution to another.