MDM Financial Services Tax Preparation & Small Business Accounting (Rochester, NY)

In late December Congress passed a bill "patching" the AMT for another year. If they had not done so, an estimated 20 Million tax payers would have been hit with AMT for the first time.

AMT is basically a "shadow" tax code that was implemented in the 1960s to ensure that the "super-rich" paid at least some tax. However, it has never been adjusted for inflation, and if left unpatched would affect many middle class tax payers.

Because of how late in the calendar year this bill was passed the IRS needs time to update its computers. This may delay the processing of some refunds for several weeks.

The IRS has changed their position multiple times on how many people this will affect and how long delayed refunds will take. They now estimate approx. 13 million tax payers could be impacted.

New record keeping requirements for cash contributions. You cannot deduct a cash contribution, regardless of the amount, unless you keep as a record of the contribution: a bank record (such as a canceled check, a bank copy of a canceled check, or a bank statement containing the name of the charity, the date, and the amount) or a written communication from the charity. The written communication must include the name of the charity, date of the contribution, and amount of the contribution.

If you purchased a home or initiated a new mortgage, you may be able to deduct PMI (Private Mortgage Insurance) paid in 2007. You must itemize and there are phaseouts based on your gross income. Ask us for details.

The standard milage rate for 2007 is 48.5 cents per mile.

The Social Security Ceiling is $97,500. This means earned wages after this amount are not subject to Social Security tax.

The following tax benefits have expired for 2007:

• Relief granted for Hurricanes Katrina, Rita, and Wilma.
• Qualified electric vehicle credit.