Tax Tip of the Week
January 14, 2008

Caution: Tax filing "wait-state" ahead. Though wait-state is a term that is usually applied to the pause you notice when your computer waits for a task to finish, tax legislation signed late in 2007 may have a similar effect on your 2007 taxes - a delay in submitting your return to the IRS.

Here are the details:

The change: On December 26, 2007, President Bush signed a law increasing the alternative minimum tax (AMT) exemption. For 2007, the exemption is $66,250 if you're married filing jointly ($44,350 if you're single or file as head of household).

The law also affects the credits you apply against your AMT liability.

The problem: Filing may be delayed even if you're not subject to the AMT. That's because IRS computers require programming changes to process the new provisions correctly. In addition, the law was enacted after 2007 tax forms were printed, so you might have received forms and instructions with outdated information.

The result: You may have to wait to file your tax return until mid-February.

The specifics: You're affected if your return will include any of the following:

• Hope or lifetime learning credits (Form 8863).
• The nonbusiness energy property credit or the residential energy efficient property credit (Form 5695).
• The credit for child and dependent care expenses (Form 1040A, Schedule 2).
• The mortgage interest credit (Form 8396).
• The District of Columbia first-time homebuyer credit (Form 8859).

All other forms, including the one used to calculate the AMT (Form 6251), have been updated.

Contact us to learn if the delay applies to you. Just don't wait too long. Despite the holdup, the due date for filing your 2007 tax return is still April 15.

Questions for our Financial Expert?
E-Mail us at: finance@ClevelandSeniors.Com