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Taxpayers should be aware of the following changes when they go to the Legal Office for tax assistance this year.
• Charitable contributions for all years after 2006 will be adjustments to the taxpayer’s gross income – not an itemized deduction
• The following individual tax benefits expired in 2005: deduction from AGI for educator expenses, tuition and fees deduction, deduction for clean-fuel vehicles, deduction for state and local general sales tax, special rules for qualified contributions, District of Columbia first-time homebuyer credit (for homes purchased after 2005)
• Maximum deductible IRA contributions increased to $5,000 for taxpayers over age 50 − no changes for other taxpayers
• The range at which deductions for IRA contributions phase out is based on the taxpayer’s Modified Adjusted Gross Income. That range increased to $75,000 to $85,000 for married taxpayers filing jointly and qualifying widow(ers) – no change for other taxpayers
• Non-taxable combat pay treated as earned income for the deductible limit after 2003; active duty military members who received non-taxable combat pay during 2004 and 2005 can make contributions for those years through May 28, 2009
• For the first time ever, taxpayers can now have refunds split among up to three deposit accounts; Form 8888 must be filed if the refund is to be split
• This option is available to filers of Forms 1040, 1040A, 1040EZ, and 1040NR, 1040 NR-EZ, 1040-PR, and 1040-SS
For questions regarding the aforementioned changes or assistance with other tax-related issues, contact the Ramstein Tax Center at 480-1040.
