Effective in Tax Year 2007
Restrictions on Charitable Contributions
Cash contributions. All
cash contributions made in tax years beginning
after August 17, 2006, to any qualified charity
must be supported by a dated bank record or a
dated receipt.
Clothing and household items.
Beginning with contributions made after August
17, 2006, no deduction is allowed for most
contributions of clothing and household items
unless the donated property is in good used
condition or better.
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Adoption
Adoption credit. Beginning
in 2007, the credit allowed for an adoption of a
child with special needs is $11,390 and the
maximum credit allowed for other adoptions is
the amount of qualified adoption expenses up to
$11,390. The credit begins to phase out if you
have modified adjusted gross income of $170,820
or more and is completely phased out if you have
modified adjusted gross income of $210,820 or
more.
Adoption assistance program.
Beginning in 2007, you may be able to exclude up
to $11,390 from your gross income for qualified
adoption expenses paid or incurred by your
employer under a qualified adoption assistance
program in connection with your adoption of an
eligible child. This income exclusion starts to
phase out if your modified adjusted gross income
is $170,820 or more and is completely phased out
if your modified adjusted gross income is
$210,820 or more.
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Medicare Part D
Premiums Deductible as Medical Expenses
Medicare Part D is a voluntary prescription
drug insurance program for persons with Medicare
A or B. You can include as a medical expense
premiums you pay for Medicare D.
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Standard Mileage
Rates
Beginning January 1, 2007, the allowable
deductions for the standard mileage rate are as
follows:
-
Business miles.
The standard mileage rate for the cost of
operating your car increases to 48.5
cents a mile for all business miles driven.
-
Charitable services.
The standard mileage rate allowed for use of
your car when you use your car to provide
charitable services to a charitable
organization remains at 14
cents a mile.
-
Medical reasons.
The standard mileage rate allowed for use of
your car for medical reasons increases to
20 cents a mile.
-
Moving. The
standard mileage rate for determining moving
expenses increases to 20
cents a mile.
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Depreciation and Section 179 Expense
The maximum
section 179 deduction you can elect for
qualified section 179 property placed in service
in 2007 has increased to $112,000 for ($147,000,
for qualified enterprise zone and qualified
renewal community property). This limit is
reduced by the amount by which the cost of
qualified property placed in service during the
tax year exceeds $450,000.
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Domestic Production
Activities Deduction
For tax years beginning after
December 31, 2006, the domestic production
activities deduction percentage increases from
3% to 6%.
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