Preparing for a New Tax Season
TAX time. It is undeniably one of the most stressful times of the year. But starting early could give you the jump on this year's tax season, including all the benefits of the new tax laws, breaks and deductions.
This year, take note of the changes, additions and eye-opening adjustments that just might add a few extra dollars to your pocket.
Active-Duty Military Breaks
Effective since Veteran's Day, November 11, 2003, these laws give tax breaks to active-duty military personnel, reservists and select civilian employees of the armed forces. Capital gains on the sale of a home are excluded while the qualifying person is serving extended duty, for a period not to exceed 10 years, for sales occurring after May 6, 1997. Additionally, death gratuity payments, formerly $6,000 and subject to a 50 percent tax, increased to $12,000 and are now tax-exempt, retroactive to 2001 and 2002.
Earn a Tax Deduction for Your Car
Current federal tax laws allow taxpayers to claim a one-time clean-burning-fuel deduction of $2,000 on form 1040 for certified vehicles under the Working Families Tax Relief Act. Eligible vehicles include the 2005 Ford Escape and the 2001-2005 Toyota Prius. The Honda Insight is certified for model years 2000-2004 and the Honda Civic Hybrid for model years 2003-2004. The taxpayer must be the original owner.
Relief for Married Couples.
The Married Filing Jointly 15 Percent Tax Bracket has been extended from $47,450 to $56,800. The Married Filing Jointly standard deduction has been increased from $7,950 to $9,500, or twice the amount allowed for single filers. Still, some researchers argue that federal laws that hurt dual-income married couples disproportionately hurt African-American households. "Black women account for 40 percent of their household's income, while married White women's income accounts for only 29 percent," says visiting professor Dorothy Brown of the University of Virginia School of Law. …