2003 INCOME TAX RETURN

J. William Seabrooke, CPA, P.C. A Professional Corporation 2901 Creek’s Edge Parkway Austin, TX 78733-6351 (512) 263-4152 (Office) (512) 263-5899 (Fax) (512) 791-5899 (Mobile) bseabrooke@austin.rr.com Member: American Institute of Certified Public Accountants 2007 INCOME TAX RETURN INFORMATION PACKAGE Please complete this “2007 Income Tax Return Information Package” which includes both the required basic tax return data and the supplemental data required to identify whether special tax treatment may be required. It also includes a “Financial Data” summary schedule to assist you in organizing your income and expenses. The information which you provide to me in this document will reduce the time required for the preparation of your 2007 return. Although you may have submitted this same information in prior years, I review every line item on every page each year to identify any changes that have occurred during the current tax year and errors that may have occurred in prior tax years that may require the filing of an amended tax return. The last six pages of this document contain a brief summarization of all of the significant tax law changes for 2007. Please inform me if any of these changes will affect your 2007 return. J. William Seabrooke, CPA, P.C. A Professional Corporation 2901 Creek’s Edge Parkway Austin, TX 78733-6351 (512) 263-4152 (Office) (512) 263-5899 (Fax) (512) 791-5899 (Mobile) bseabrooke@austin.rr.com Member: American Institute of Certified Public Accountants QUESTIONNAIRE Please answer the following questions. They are intended to provide information needed for your tax return preparation and to indicate where potentially more complicated reporting requirements may exist. PERSONAL DATA: 1. Please indicate how you would like to describe your occupation on the income tax return: Yourself: _____________________________________________ Your Husband/Wife:____________________________________ Yes No 2. Would you and your husband or wife want to contribute $3.00 of your tax liability to the presidential election campaign fund? 3. Names, ages and social security number of anyone that you are claiming as a dependent: ( ) ( ) NAME AGE SOC. SEC. # ___________________________________________________________________________ ___________________________________________________________________________ _________________________________________________________________________________________ Did all the above dependents reside with you for the entire year? Are all the above dependents unmarried? ................................. Are any of the above dependents filing their own tax return? ( ( ( ) ) ) ( ( ( ) ) ) 4. Your Date of Birth___________________________ Spouse Date of Birth__________________________ 5. Your Social Security #________________________ Spouse Social Security #_______________________ 6. Your e-mail address__________________________ Spouse e-mail address_________________________ 7. Your Work Phone #__________________________ Spouse Work Phone #_________________________ 8. Your Cell Phone #____________________________ Spouse Cell Phone #__________________________ J. William Seabrooke, CPA, P.C. A Professional Corporation 2901 Creek’s Edge Parkway Austin, TX 78733-6351 (512) 263-4152 (Office) (512) 263-5899 (Fax) (512) 791-5899 (Mobile) bseabrooke@austin.rr.com Member: American Institute of Certified Public Accountants Personal Information (Cont’d) 9. FAX Number _______________________________ Phone # to print on Form 1040__________________ 10. Mailing Address:_______________________________________________________________________ 11. Electronic Filing Yes/No Direct Deposit of Refund (If Any) or Withdrawl - Yes/No If “Yes” Name of Financial Institution______________________ Checking/Savings Bank Routing #_____________ Your Account # ________________________________ Yes 12. Do you support anyone else (other than your children) that you may believe that you can claim as a dependent? .. ...................... If divorced or separated, are you claiming a child as a dependent whom you did not have custody of for the entire year? .................. Did you pay or receive any alimony?.. ...................................... Total Amount for 2007: $_______________________________ 14. Were you or your spouse age 65 or older as of 12/31/07? Yourself ?.. ....................................................................... Your Spouse ?.. ................................................................ ( ( ) ) ( ( No ( ( ( ) ) ) ( ( ( ) ) ) 13. ) ) Income: 15. Did you have any outside business interests (including rental property) in addition to your normal employment income? ( ) ( ) 16. Did you or your spouse receive any distribution from a pension, profit sharing, or other retirement plan during the year? .............................................( 17. Did you receive installment sale payments in 2007 from a sale made in a prior year? Did either you or your spouse receive any disability or unemployment compensation during the year? .............................................. Total Amount for 2007: $_____________________________________ ) ( ) ( ) ( ) 18. ( ) ( ) J. William Seabrooke, CPA, P.C. A Professional Corporation 2901 Creek’s Edge Parkway Austin, TX 78733-6351 (512) 263-4152 (Office) (512) 263-5899 (Fax) (512) 791-5899 (Mobile) bseabrooke@austin.rr.com Member: American Institute of Certified Public Accountants Yes 19. 20. 21. Did you or your spouse or dependents receive any social security benefits? Did you receive interest income from a mortgage or note you originated? Did you receive any capital gains distributions from investments or insurance plans?.. .................................................................. No ( ( ( ) ) ) ( ( ( ) ) ) Financial Transactions: 22. Did you purchase, sell, or exchange your personal residence during the past two years? .. ...................................................................... Did you purchase or sell any other real estate during the year? . Did you sell any stocks, bonds, or other securities during the year? ( ( ( ) ) ) ( ( ( ) ) ) 23. 24. If “Yes” please attach all of the Schedule D and 1099-B reports from your investment firms. Note: Effective in 2005 the IRS now requires the details for each individual transaction on Schedule D. 25. Were you a member of any partnership or, joint venture during the year? ........................................................................... Did you make any non-cash charitable contributions such as clothing, furniture, or other property?.. .......................................... Did you incur any moving expenses during the year? ............... ( ) ( ) 26. ( ( ) ) ) ( ( ( ) ) ) 27. 28. 29. Did you incur an early withdrawal penalty in any savings accounts? .................( Did you pay mortgage interest to an INDIVIDUAL (not a bank or financial institution)? If “Yes”, please provide their name, address and social security #: ( ) ( ) __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ J. William Seabrooke, CPA, P.C. A Professional Corporation 2901 Creek’s Edge Parkway Austin, TX 78733-6351 (512) 263-4152 (Office) (512) 263-5899 (Fax) (512) 791-5899 (Mobile) bseabrooke@austin.rr.com Member: American Institute of Certified Public Accountants Yes 30. Did you contribute more than $250 to any single charitable or religious organization? Did you incur any child care expenses?.................................. No ( ( ) ) ( ( ) ) 31. Amount $__________________________ Recipient _____________________________ # of Children _______________________ SSAN/Tax ID # ________________________ 32. Does anyone owe you money from a loan which you have not been able to collect?.. ............................................................... Please indicate the amount of any IRA contribution you or your spouse made in 2007 that was not deducted on your 2006 tax return. Self: $ _____________________________________________ Spouse: $___________________________________________ Were any IRA contributions made in 2007 prior to 4/16/07 for a 2006 tax return deduction?.. ............................................ ( ) ( ) 33. ( ) ( ) Miscellaneous: 34. Were you audited by either the IRS or a state tax agency during the past two years? ........................................................................ Did you make estimated tax payments (via Form 1040-ES and not Form W-2) during 2007? ................................................................ If “Yes”, what were the actual deposit dates and amounts? _________________________________________________________________ _________________________________________________________________ 36. Did you incur theft or casualty losses not covered by insurance which exceeded 10% of your income? ( ( ) ) ( ( ) ) 35. ( ) ( ) 37. IMPORTANT Please indicate the amount of tax refund credit from your 2006 Federal or state income tax returns Federal $____________State $___________ J. William Seabrooke, CPA, P.C. A Professional Corporation 2901 Creek’s Edge Parkway Austin, TX 78733-6351 (512) 263-4152 (Office) (512) 263-5899 (Fax) (512) 791-5899 (Mobile) bseabrooke@austin.rr.com Member: American Institute of Certified Public Accountants FINANCIAL DATA The following schedules are intended to identify the specific financial data necessary for the preparation of your income tax return. INCOME: W-2 Salary/ Wages: Yourself: Husband/Wife: Interest: Received From:_______________________________________ Received From:_______________________________________ Received From:_______________________________________ Received From:_______________________________________ Received From:_______________________________________ Dividends: Received From:_______________________________________ Received From:_______________________________________ Received From:_______________________________________ Received From:_______________________________________ Received From:_______________________________________ State Income Tax Refund: State _____________________________ $________________ $________________ $________________ $________________ $________________ $________________ $________________ $________________ $________________ $________________ $________________ $________________ $________________ $________________ $________________ Unemployment Compensation: State ___________________________ Taxable Retirement Income: Source ___________________________ *** Please provide me with copies of your W-2s, 1099s and the 12/31/07 statements from each of the financial institutions that reported the above income to the Internal Revenue Service *** J. William Seabrooke, CPA, P.C. A Professional Corporation 2901 Creek’s Edge Parkway Austin, TX 78733-6351 (512) 263-4152 (Office) (512) 263-5899 (Fax) (512) 791-5899 (Mobile) bseabrooke@austin.rr.com Member: American Institute of Certified Public Accountants Taxable Retirement Income (Cont’d): Pension Income: IRA Distributions: Alimony Received: Other (Describe) Other (Describe) _______________________________________ _______________________________________ _______________________________________ _______________________________________ _______________________________________ $________________ $________________ $________________ $________________ $________________ Adjustments to Gross Income: Educator Expenses Business Expenses for Armed Forces Reservists, performing artists or fee-basis state or local government officials Alimony Payments Health Savings Account (HSA) deductions Self Employment Taxes IRA or Keogh Plan Contributions Student Loan Interest Tuition & Fees Deductions Moving Expenses Self Employment Health Insurance Premiums Self Employed SEP, SIMPLE & Qualified Plans Penalty for Early Withdrawal of Savings Domestic Production Activities Archer MSA Deduction Deduction for clean-fuel vehicles Jury Duty pay relinquished to employer $________________ $________________ $________________ $________________ $________________ $________________ $________________ $________________ $________________ $________________ $________________ $________________ $________________ $________________ $________________ $________________ *** Please provide me with copies of your Form 1098s, 1099s, and the 12/31/07 statements from each of the financial institutions that reported the above income to the Internal Revenue Service *** J. William Seabrooke, CPA, P.C. A Professional Corporation 2901 Creek’s Edge Parkway Austin, TX 78733-6351 (512) 263-4152 (Office) (512) 263-5899 (Fax) (512) 791-5899 (Mobile) bseabrooke@austin.rr.com Member: American Institute of Certified Public Accountants Itemized Deductions: Medical: Doctors, Dentists, hospitals and nursing care (net of any insurance proceeds): Medicines, drugs and fees paid: Eyeglasses and hearing aids: Total automobile mileage To & From medical facilities for medical care and treatments: Health insurance premiums paid (excluding disability or life insurance) including Long Term Care Insurance: $________________ $________________ $________________ _________________ $________________ NOTE: Medical expenses will only increase your itemized deductions to the extent that they exceed 7.5% of your Adjusted Gross Income (AGI). The medical mileage rate for 2007 is $ .20/mile. General State Sales Taxes Deduction (Personal Use only – Not for your trade or business) If you itemize your deductions and live in a state that has a state income tax, you may elect to deduct either the state income tax or the applicable states sales taxes that were paid. Deduct State Income Taxes__________ Deduct State Sales Taxes_______________ If you itemize your deductions and live in a state that does not have a state income tax you may deduct the applicable general sales taxes that you paid during the year. Enter Your local sales tax rate__________% You have the option of deducting either 1) the actual sales tax amount from your receipts or 2) the amount from the IRS tables: Actual Receipts Amount $_________________ Use IRS Tables________________ If you selected “Use IRS Tables” you can also deduct an additional amount for the sales taxes that were paid for separate large purchases. Please enter those amounts below: Motor Vehicles (cars, SUVs, trucks, vans, leased vehicles) Boats, motorcycles, motor homes, RVs, off-road vehicles Airplane Personal Residence Home Building Materials (New Homes Only) $______________________ $______________________ $______________________ $______________________ $______________________ J. William Seabrooke, CPA, P.C. A Professional Corporation 2901 Creek’s Edge Parkway Austin, TX 78733-6351 (512) 263-4152 (Office) (512) 263-5899 (Fax) (512) 791-5899 (Mobile) bseabrooke@austin.rr.com Member: American Institute of Certified Public Accountants Taxes: Real Estate (Describe Properties): Real Estate (Describe Properties): State Income (State): State Income (State): State Disability Insurance (State): __________________________ __________________________ __________________________ __________________________ __________________________ ____________________ ____________________ $________________ $________________ $________________ $________________ $________________ $________________ $________________ $________________ Vehicle Ad Valorem (Non-Texas) (State): Vehicle Ad Valorem (Non-Texas) (State): Other Taxes (Please describe): _________________________________ Interest Expense: NOTE: The interest expense for personal loans, automobile, boat, credit cards or personal line of credit loans can not be deducted on Schedule A Student Loan Interest (Please indicate Recipient) Loan Company: ______________________________________ $________________ Home Mortgage Interest (Please indicate Recipient) Mortgage Company: Mortgage Company: Mortgage Company: ______________________________________ ______________________________________ _______________________________________ $________________ $________________ $________________ Broker/Margin Interest Paid (Please indicate Recipient) Investment Company: ______________________________________ Investment Company: ______________________________________ Investment Company: _______________________________________ $________________ $________________ $________________ *** Some borrowers may be able to deduct mortgage insurance premiums paid on mortgages taken out or refinanced during 2007. A borrower who prepays premiums for later years may deduct only the premiums that relate to 2007, except for prepayments for guarantees made by the Department of Veterans Affairs or the Rural Housing Service. Only mortgage insurance contracts issued during 2007, 2008, 2009 or 2010 qualify for this new itemized deduction. *** J. William Seabrooke, CPA, P.C. A Professional Corporation 2901 Creek’s Edge Parkway Austin, TX 78733-6351 (512) 263-4152 (Office) (512) 263-5899 (Fax) (512) 791-5899 (Mobile) bseabrooke@austin.rr.com Member: American Institute of Certified Public Accountants Contributions (Cash): Religious: Religious: Religious: Religious: _____________________________________________ _____________________________________________ _____________________________________________ _____________________________________________ $________________ $________________ $________________ $________________ Charitable (i.e. United Way, March of Dimes, American Red Cross, American Heart Association, etc: _____________________________________________ $________________ Charitable (i.e. United Way, March of Dimes, American Red Cross, American Heart Association, etc: _____________________________________________ $________________ Charitable (i.e. United Way, March of Dimes, American Red Cross, American Heart Association, etc: _____________________________________________ $________________ Charitable (i.e. United Way, March of Dimes, American Red Cross, American Heart Association, etc: _____________________________________________ $________________ Contributions (Non Cash): (i.e. Goodwill Industries, Capital Area Food Bank, Salvation Army, etc) Organization: _____________________________________________ Organization: _____________________________________________ Organization: _____________________________________________ Volunteer Work: $________________ $________________ $________________ (Describe organization, mileage and expenses involved) ________________ ________________ ________________ Organization: _____________________________________________ Organization: _____________________________________________ Organization: _____________________________________________ Special new rules apply for charitable donations made in taxable years beginning after August 17, 2006. For most taxpayers the requirement began in 2007. (see “Highlights-2007 Tax Law Changes” on page 16 of this document). The charitable organization mileage rate for 2007 is $ .14/mile. Miscellaneous Deductions: Moving Expenses Professional or Union Dues __________________________ __________________________ $________________ $________________ $________________ Professional Publications & Job Supplies__________________________ J. William Seabrooke, CPA, P.C. A Professional Corporation 2901 Creek’s Edge Parkway Austin, TX 78733-6351 (512) 263-4152 (Office) (512) 263-5899 (Fax) (512) 791-5899 (Mobile) bseabrooke@austin.rr.com Member: American Institute of Certified Public Accountants Miscellaneous Deductions (Cont’d): Unreimbursed Business Travel __________________________ $________________ $________________ $________________ $________________ $________________ $________________ $________________ $________________ $________________ $________________ $________________ $________________ $________________ $________________ Unreimbursed Meals & Entertainment __________________________ Employment Related Education Job hunting costs Safety Deposit Box 2006 Tax Return Preparation Educator Expenses __________________________ __________________________ __________________________ __________________________ __________________________ Investment Counsel and Tax Planning __________________________ Business Use of Your Home IRA Custodial Fees Gambling losses Other (Please Describe) Other (Please Describe) Other (Please Describe) __________________________ __________________________ __________________________ __________________________ __________________________ __________________________ J. William Seabrooke, CPA, P.C. A Professional Corporation 2901 Creek’s Edge Parkway Austin, TX 78733-6351 (512) 263-4152 (Office) (512) 263-5899 (Fax) (512) 791-5899 (Mobile) bseabrooke@austin.rr.com Member: American Institute of Certified Public Accountants RENTAL PROPERTY OWNERS Rental Income .................................................................................... $____________________________ Rental Expenses: Mortgage interest ........................................................................... $____________________________ Real estate tax ................................................................................ $____________________________ Property / Mortgage insurance ....................................................... $____________________________ Repairs ........................................................................................... $_____________________________ Management fees ........................................................................... $_____________________________ Maintenance .................................................................................... $____________________________ Utilities ........................................................................................... $_____________________________ Depreciation (I will calculate) ...................................................... $___________XXXXXX_________ Other (specify) ............................................................................... $_____________________________ .................................................................... $_____________________________ .................................................................... $_____________________________ J. William Seabrooke, CPA, P.C. A Professional Corporation 2901 Creek’s Edge Parkway Austin, TX 78733-6351 (512) 263-4152 (Office) (512) 263-5899 (Fax) (512) 791-5899 (Mobile) bseabrooke@austin.rr.com Member: American Institute of Certified Public Accountants BUSINESS / PROFESSIONAL INCOME Gross Business Income ............................................................................... $________________________ Business expenses : Advertising .......................................................................................... $__________________________ Bank service char ges ......................................................................... $__________________________ Car or truck expense ......................................................................... $__________________________ Depreciation (I will calculate) ...................................................... $___________XXXX.XX_____ Dues, publications, books, etc .........................................................$________________________ Insurance ........................................................................................$________________________ Interest ............................................................................................ $_______________________ Legal and other professional expense ............................................. $______________________ Office supplies and expenses ......................................................... $______________________ Travel and entertainment ............................................................................. $________________________ Other (describe) ................................................................................... $__________________________ ....................................................................... $__________________________ ..................................................................... $__________________________ $__________________________ The Business Mileage Rate for 2007 is $ .485/mile. J. William Seabrooke, CPA, P.C. A Professional Corporation 2901 Creek’s Edge Parkway Austin, TX 78733-6351 (512) 263-4152 (Office) (512) 263-5899 (Fax) (512) 791-5899 (Mobile) bseabrooke@austin.rr.com Member: American Institute of Certified Public Accountants Highlights — 2007 Tax Law Changes Law Raises AMT Exemption, Filers of Five Forms Must Wait Until Feb. 11 FS-2008-1, January 2008 Summary AMT exemptions rise. Filing is delayed for some taxpayers. Several popular deductions reappear on IRS forms. Tax relief is available to struggling homeowners whose mortgage debt is forgiven. Retirement savings incentives expand. A new deduction is available for some mortgage insurance premiums. And new recordkeeping rules apply to cash donations to charity. These are among the changes taxpayers will find when they fill out their 2007 tax returns. More information about the changes, summarized below, can be found on IRS.gov and in various IRS documents, including the Instructions for Form 1040. AMT Exemption Increased for One Year For tax-year 2007, Congress raised the alternative minimum tax exemption to $66,250 for a married couple filing a joint return, up from $62,550 in 2006. The exemption rises to $33,125 for a married person filing separately, up from $31,275, and it rises to $44,350 for singles and heads of household, up from $42,500. Under current law, these exemption amounts will drop to $45,000, $22,500 and $33,750, respectively, in 2008. Form 6251 and the AMT Calculator, which is being updated and will be available later in January, provide more information. While the vast majority of taxpayers can file as usual, about 13.5 million taxpayers who file any of five tax forms affected by recent tax law changes related to the AMT will have to wait until Feb. 11, 2008, to file their returns. IRS.gov has more information on this important subject, including a list of affected forms and questions and answers. Extender Tax Breaks Reappear on IRS Forms Several popular tax breaks, renewed too late to be included on 2006 forms, once again appear as separate items on various 2007 IRS forms. As a result, unlike last year, eligible taxpayers will no longer have to follow special instructions in order to claim the deduction for state and local sales taxes, the educator expense deduction and the tuition and fees deduction. J. William Seabrooke, CPA, P.C. A Professional Corporation 2901 Creek’s Edge Parkway Austin, TX 78733-6351 (512) 263-4152 (Office) (512) 263-5899 (Fax) (512) 791-5899 (Mobile) bseabrooke@austin.rr.com Member: American Institute of Certified Public Accountants Highlights — 2007 Tax Law Changes (Cont’d) Those who itemize, rather than taking the standard deduction, can choose to claim state and local sales taxes on Form 1040 Schedule A, Line 5. The educator expense deduction is reported on Form 1040, Line 23 or Form 1040A, Line 16. Taxpayers who choose to claim the tuition and fees deduction must fill out and attach new Form 8917. The resulting deduction is reported on Form 1040 Line 34 or Form 1040A Line 19. Note that many who qualify for the tuition and fees deduction may reap greater tax savings by instead claiming the Hope credit or the lifetime learning credit for a particular student. Figure these credits on Form 8863. Publication 970 has details on these and other education-related tax benefits. Contribution Limits Rise for IRAs and Other Retirement Plans This filing season, more people can make tax-deductible contributions to a traditional IRA. The deduction is phased out for singles and heads of household who are covered by a workplace retirement plan, with incomes between $52,000 and $62,000, compared to $50,000 to $60,000 last year. The phase-out range is $83,000 to $103,000, up from $75,000 to $85,000 last year, if the spouse making the IRA contribution is covered by a workplace retirement plan. Where an IRA contributor, not covered by a workplace retirement plan, is married to someone who is covered, the deduction is phased out if the couple’s income is between $156,000 and $166,000, up from $150,000 to $160,000 in 2006. The phase-out range remains $0 to $10,000 for a married individual filing a separate return who is covered by a retirement plan at work. Use the worksheet in the line instructions for Form 1040 Line 32 or Form 1040A Line 17 to figure the IRA deduction. For 2007 and 2008, the elective deferral (contribution) limit for employees who participate in 401(k), 403(b) and most 457 plans rises $500, to $15,500. The catch-up contribution limit for those aged 50 to 70-½ remains at $5,000. For SIMPLE plans, the limit is also up $500, to $10,500, and the catch-up limit remains $2,500. This year for the first time income limits for the saver’s credit are adjusted for inflation. The saver’s credit supplements other tax benefits available to low- and- moderate income taxpayers who save for retirement. Begun in 2002 as a temporary provision, the saver’s credit is now a permanent part of the tax code. Use Form 8880 to claim the credit. J. William Seabrooke, CPA, P.C. A Professional Corporation 2901 Creek’s Edge Parkway Austin, TX 78733-6351 (512) 263-4152 (Office) (512) 263-5899 (Fax) (512) 791-5899 (Mobile) bseabrooke@austin.rr.com Member: American Institute of Certified Public Accountants Highlights — 2007 Tax Law Changes (Cont’d) Mortgage Insurance Premiums May be Deductible Some borrowers may be able to deduct mortgage insurance premiums paid on mortgages taken out or refinanced during 2007. A borrower who prepays premiums for later years may deduct only the premiums that relate to 2007, except for prepayments for guarantees made by the Department of Veterans Affairs or the Rural Housing Service. Only mortgage insurance contracts issued during 2007, 2008, 2009 or 2010 qualify for this new itemized deduction. Proceeds of the mortgage, secured by a first or second home, must be used exclusively to buy, build or improve these homes, or alternatively, to refinance a mortgage, secured by the home and used for these purposes. Home-equity loans used for other purposes are not eligible. The deduction for mortgage insurance premiums is phased out for taxpayers with adjusted gross incomes exceeding $100,000 ($50,000, if married filing separately). Claim this deduction on Schedule A, Line 13. Further details are in Publication 936. New Rules for Giving to Charity To deduct any charitable donation of money, taxpayers must have a bank record or a written communication from the recipient showing the name of the organization and the date and amount of the contribution. Though taxpayers are already required to keep records to support their contribution deductions, this new provision is designed to provide greater certainty, both to taxpayers and the government, in determining what may be deducted as a charitable contribution. See Publication 526.  To be deductible, clothing and household items donated to charity after Aug. 17, 2006, must be in good used condition or better. However, a taxpayer may claim a deduction of more than $500 for any single item, regardless of its condition, if the taxpayer includes a qualified appraisal of the item with the return. Household items include furniture, furnishings, electronics, appliances, and linens. To deduct any charitable donation of money, taxpayers must have a bank record or a written communication from the recipient showing the name of the organization and the date and amount of the contribution. Though taxpayers are already required to keep records to support their contribution deductions, this new provision is designed to provide greater certainty, both to taxpayers and the government, in determining what may be deducted as a charitable contribution. This provision applies to contributions made in taxable years beginning after Aug. 17, 2006. For taxpayers that file returns on a calendar-year basis, including most individuals, the new provision applies to contributions made beginning in 2007. An IRA holder, age 70 ½ or over, can directly transfer tax-free, up to $100,000 per year to an eligible charity. This option is available in tax years 2006 and 2007. Eligible IRA holders can take advantage of this provision, regardless of whether they itemize their deductions. Funds must be contributed directly by the IRA trustee to the eligible charity. Transferred amounts are counted in determining whether the holder has met the IRA’s required minimum distribution rules. For more information on these changes and tips for donating to charity, see IRS News Release IR-2006-192.   J. William Seabrooke, CPA, P.C. A Professional Corporation 2901 Creek’s Edge Parkway Austin, TX 78733-6351 (512) 263-4152 (Office) (512) 263-5899 (Fax) (512) 791-5899 (Mobile) bseabrooke@austin.rr.com Member: American Institute of Certified Public Accountants Highlights — 2007 Tax Law Changes (Cont’d) Standard Mileage Rates Adjusted for 2007 The standard mileage rate for business use of a car, van, pick-up or panel truck is 48.5 cents a mile, up 4 cents from 2006. The standard mileage rate for the cost of operating a vehicle for medical reasons or as part of a deductible move is 20 cents a mile, up 2 cents over last year. The standard mileage rate for using a car to provide services to charitable organizations is set by law and remains at 14 cents a mile. Inflation Adjustments for 2007 Personal exemptions and standard deductions rise, tax brackets are widened and more than three dozen individual and business tax provisions are adjusted to keep pace with inflation. A complete rundown of these changes can be found at 2007 Inflation Adjustments Widen Tax Brackets, Change Tax Benefits. Popular items adjusted include the following:  The value of each personal and dependency exemption is $3,400, up $100 from 2006. Most taxpayers can take personal exemptions for themselves and an additional exemption for each eligible dependent. An individual who qualifies as someone else’s dependent cannot claim a personal exemption, and personal and dependency exemptions are phased out for higher-income taxpayers. The standard deduction is $10,700 for married couples filing a joint return and qualifying widow(er)s, a $400 increase over 2006; $5,350 for singles and married individuals filing separate returns, up $200; and $7,850 for heads of household, up $300. Higher amounts apply to blind people and senior citizens. The standard deduction is often reduced for a taxpayer who qualifies as someone else’s dependent. Nearly two out of three taxpayers take the standard deduction, rather than itemizing deductions, such as mortgage interest, charitable contributions, and state and local taxes. The maximum earned income tax credit is $4,716 for taxpayers with two or more qualifying children, $2,853 for those with one child and $428 for people with no children. Last year’s maximums were $4,536, $2,747 and $412, respectively. Available to low and moderate income workers and working families, the EITC helps taxpayers whose incomes are below certain income thresholds, which in 2007 rise to $39,783 for those with two or more children, $35,241 for people with one child and $14,590 for those with no children. One in six taxpayers claim the EITC, which unlike most tax breaks, is refundable, meaning that people can get it even if they owe no tax and even if no tax is taken out of their paychecks.   J. William Seabrooke, CPA, P.C. A Professional Corporation 2901 Creek’s Edge Parkway Austin, TX 78733-6351 (512) 263-4152 (Office) (512) 263-5899 (Fax) (512) 791-5899 (Mobile) bseabrooke@austin.rr.com Member: American Institute of Certified Public Accountants Highlights — 2007 Tax Law Changes (Cont’d) Other 2007 Tax Law Changes Taxpayers can exclude up to $2 million of debt forgiven on their principal residence. The limit is $1 million for a married person filing a separate return. This provision applies to debt forgiven in 2007, 2008 or 2009. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure qualify for this relief. Employees working for employers who failed to withhold Social Security and Medicare taxes should use new Form 8919 to report and pay their share of these taxes. This includes section 530 employees — that is, people who work for employers claiming relief from federal payroll taxes under section 530 of the Revenue Act of 1978. It also includes employees who are treated as independent contractors but who have received a determination letter from the IRS which states they are employees. Workers who believe they are misclassified as independent contractors can file Form SS-8 with the IRS and request a determination of their worker classification. For employees, the Social Security tax rate is 6.2 percent and the Medicare tax rate is 1.45 percent. Normally, employers withhold these taxes from workers’ pay, match these amounts and turn over the combined amounts to the IRS. Workers, properly classified as independent contractors, should not use Form 8919 but instead, continue to use Schedule SE. IRS Publication 1779 has further details on employee versus independent contractor status. A retired public safety officer can exclude from income up to $3,000 in distributions from an eligible government retirement plan used to pay the premiums on accident and health insurance or long-term care insurance. Distributions must be made directly from the plan to the insurance provider. Retired law enforcement officers, firefighters, chaplains and members of rescue squads or ambulance crews qualify for this provision. Claim the exclusion on Form 1040 Line 16 or Form 1040A Line 12. There’s no telephone tax refund for 2007, but it’s not too late to request this one-time refund on a 2006 return. Most telephone customers, including most cell-phone users, qualify for the refund. Eligible telephone customers who filed a 2006 tax return but overlooked this special excise tax refund can file an amended return using Form 1040X. Those who never filed for tax year 2006 can request it when they file their 2006 return. Phone customers who don’t need to file a regular income-tax return, including many low-income people and senior citizens, can use a special short form, Form 1040EZ-T, to request the refund. Compensated work therapy payments received by some veterans, unable to work, are now tax-free. Because these are tax-free veterans’ benefits, recipients will no longer receive Forms 1099, reporting these payments, from the Department of Veterans Affairs. Disabled veterans who paid tax on these benefits in 2004, 2005 and 2006 can claim a refund by filing an amended return using Form 1040X. See news release IR-2007-198 for details. J. William Seabrooke, CPA, P.C. A Professional Corporation 2901 Creek’s Edge Parkway Austin, TX 78733-6351 (512) 263-4152 (Office) (512) 263-5899 (Fax) (512) 791-5899 (Mobile) bseabrooke@austin.rr.com Member: American Institute of Certified Public Accountants Highlights — 2007 Tax Law Changes (Cont’d) Related Information:                News Release 2008-1: Tax Packages Arrive in Mail; IRS Reminds Taxpayers to e-file and Watch for Tax Law Changes Form 1040 (PDF), Instructions for Form 1040 ( PDF Version) Form 1040A (PDF), Instructions for Form 1040A ( PDF Version) Alternative Minimum Tax (AMT) – How it Affects Filing Season 2008 AMT and Filing Season 2008: Q&A Form 6251 (PDF), Alternative Minimum Tax - Individuals Form 8917 (PDF), Tuition and Fees Form 8863 (PDF), Education Credits Publication 970, Tax Benefits for Education ( Pub. 970 PDF Version) Form 8880 (PDF), Credit for Qualified Retirement Savings Contributions Publication 936, Home Interest Deduction; ( Pub. 936 PDF Version) Publication 526, Charitable Contributions; ( Pub. 526 PDF Version) Form 8919 (PDF), Uncollected Social Security Tax and Medicare Tax on Wages Form 1040 Schedule SE, Self-Employment Tax Publication 1779 (PDF), Independent Contractor or Employee Source: IRS Website - http://www.irs.gov/newsroom/article/0,,id=177049,00.html *** IRS Publication 553, ―Highlights of 2006 Tax Changes,‖ also covers 2007 and has more details on the new provisions for tax year 2007. It is available for download from the IRS website or by calling (toll-free) 1-800-TAX-FORM (1-800-829-3676). *** http://www.irs.gov