2008 Tax Law Changes (Part 4)

2008 Tax Law Changes, continued

Earned Income for Additional Child Tax Credit. For 2008, the minimum earned income amount used to figure the additional child tax credit has decreased to $8,500.

Earned Income Credit. The maximum amount of the credit has increased. The most you can get is, $2,917 if you have one qualifying child, $4,824 if you have more than one qualifying child, or $438 if you do not have a qualifying child.

The maximum amount of income you can earn and still get the credit has increased for 2008. You may be able to take the credit if, you have more than one qualifying child and you earn less than $38,646 ($41,646 if married filing jointly), you have one qualifying child and you earn less than $33,995 ($36,995 if married filing jointly), or you do not have a qualifying child and you earn less than $12,880 ($15,880 if married filing jointly).

The maximum amount of adjusted gross income (AGI) you can have and still get the credit also has increased. You may be able to take the credit if your AGI is less than the amount in the above list that applies to you.

The maximum amount of investment income you can have and still get the credit has increased to $2,950 for 2008.

Education Saving Bond Exclusion. For 2008, the amount of your interest income exclusion is phased out if your filing status is married filing jointly or qualifying widow(er) and your modified adjusted gross income (MAGI) is between $100,650 and $130,650. You cannot take the deduction if your MAGI is $130,650 or more.

For all other filing statuses, your interest exclusion is phased out if your MAGI is between $67,100 and $82,100. You cannot take a deduction if your MAGI is $82,100 or more.

Hope and Lifetime Learning Credits: Beginning in 2008, the following changes apply to the Hope and lifetime learning credits.

For 2008, the amount of your Hope or Lifetime Learning Credit is phased out if your modified adjusted gross income (MAGI) is between $48,000 and $58,000 ($96,000 and $116,000 if you file a joint return). You cannot claim an education credit if your MAGI is $58,000 or more ($116,000 or more if you file a joint return).

Beginning in 2008, the amount of the Hope Credit (per eligible student) is the sum of: 100% of the first $1,200 of qualified education expenses you paid for the eligible student, and 50% of the next $1,200 of qualified education expenses you paid for that student. The maximum amount of Hope credit you can claim in 2008 is $1,800 per student.

Continued next week

If you have a specific question regarding this article, as a public service, and at no cost to you, I invite you to call me with your question. Since I am in the middle of tax season, I will have to limit our conversation. I will be happy to schedule an appointment for you if you would like further consultation regarding this, or any other matter. Thank you for your interest in reading my tax column.

This column is offered as a public service with the understanding that each person's tax situation is different; that you should consult your CPA before taking any action based upon comments made in this article. Call me and I will be happy to explain my “CPA Quality Tax Preparation at H&R Block Rates” and how you can decrease your tax preparation fees, or go to www.danghazel.com for more information. I can be reached at 540-825-2771.