Taxes: What's New for 2008

Minimum Income Requirements

The minimum income required to file a tax return has increased for the 2009 tax season. If you made below the minimum income for your filing status, you may not need to file a tax return. The minimum income levels for varying filing statuses are as follows:

Single
• Under 65, $8,950
• 65 or older, $10,300

Head of Household
• Under 65, $11,500
• 65 or older, $12,850

Married, Filing Jointly
• Under 65 (both spouses), $17,900
• 65 or older (one spouse), $18,950
• 65 or older (both spouses), $20,000

Married, Filing Separately
• Any Age, $3,500

Qualifying Widow(er) with Dependent Children
• Under 65, $14,400
• 65 or Older, $15,450

Exemptions

The amount of each tax exemption has increased by $100 for 2008 to $3,500 per exemption. The income levels for exemption phase-out have changed for your 2008 return. You may claim a $500 deduction for supplying housing for an individual displaced by a Midwestern disaster.

Standard Deduction

The amount of the standard deduction for 2008 has increased, over the amount allowed in 2007, for most taxpayers. Besides the annual increase allotted for inflationary adjustments, the standard deduction may also be raised by state or local real estate taxes (that would have qualified for a deduction if you had itemized your deductions) up to $500, or up to $1,000 if married filing jointly. The deduction may also be raised by any net disaster loss from a federally declared disaster.

Itemized Deductions

Some itemized deductions will be limited for 2008 if your adjusted gross income is greater than $159,950 if you are married filing jointly and $79,975 if you are married filing separately.

First-Time Homebuyer Credit

The first-time homebuyer credit works like an interest free loan of up to $7,500 that the taxpayer will pay back over the next 15 years. This is a limited time only credit, available to first-time homebuyers who purchased a home between April 9, 2008 and and June 30, 2009. If you’re a first-time homebuyer in the market for a new home, purchasing your home prior to July 1, 2009 will enable you to take advantage of this credit in the 2010 tax season.

Energy Efficient Property Credits

The energy-efficient property credit has been extended through the year 2016. Solar electric and water heating products qualify for this credit. Beginning in 2008, geothermal heat pumps and small wind energy systems will qualify for the energy efficient property credit.

Beginning in 2009 (for the 2010) tax season, credits for insulation, exterior windows, exterior doors and some other energy-saving home improvements will be reinstated. If you have plans to make upgrades to your home in the coming year, look into energy efficient products, and you may qualify for this tax credit next year.