2007 Irs Earned Income Tax Credit Table

Document Sample
2007 Irs Earned Income Tax Credit Table Powered By Docstoc
					                                         Saturday, Jan 26, 2008

Posted on Fri, Jan. 18, 2008

The Savvy Consumer: Taxing

Special to the Star-Telegram
It's tax season again, and whether you're reporting a Barnett Shale gas bonus as income or
deducting state and local sales taxes, Texans should be on the lookout for unusual tax questions
this year.

At the top for many in Tarrant and surrounding counties are the bonus checks that thousands of
households received this year as part of signing away the rights to the minerals under their

Those bonus checks must be counted as income and are subject to federal tax, said Walter
Hatter, a local CPA with Hatter and Associates. The income should be listed on Schedule E of
Form 1040, he said.

That would mean that bonus-check recipients who generally file the easier 1040EZ will have to
file the longer 1040 this year.

"You cannot file a 1040EZ and attach a Schedule E," he said.

"There's no place to put it."

Another complication many taxpayers will face is where to report the bonus check on Schedule E.

Some accountants recommend counting it like rental-house income and placing it on line 3 of
Schedule E as "rents received." Others put it on line 2 as nondepletable royalty payments.

Income from a gas royalty check is a bit more straightforward. It should be reported on line 4 of
Schedule E, where it says "royalties received," Hatter said.
Another thing for taxpayers to be on the lookout for is Form 1099 from your gas-drilling company.
This form, which is also sent to the IRS, shows the amount of bonus and/or royalty you received
in 2007.

Not all drilling companies are filling out the form correctly, however, Hatter said. The gas income
should be placed on line 1, 2 or 3 of Form 1099 -- not in Box 7, which is for nonemployment

"If it's in Box 7, call the issuer and get them to reissue it," he said. "You should dispute it."

If you had an interest in a gas well, or if your property has been damaged in any way from the
drilling, Hatter recommends hiring a preparer to handle those more complex tax issues.

Other tax issues

Here are three more things to look for while doing your 2007 taxes:

Tax credits

Taking a tax credit? You may have to wait to file. In December, Congress once again made tax
changes in the 11th hour, making paper forms mailed out by the IRS once again out-of-date and
sending the agency scrambling to reprogram its computer system.

Because of the change in tax law, aimed at reducing the number who qualify for the alternative
minimum tax, any taxpayer who claims one of four credits on their taxes must wait until Feb. 11 to
file, the IRS said.

Returns that cannot be filed until Feb. 11 include those with any of these four credits and forms:

Form 8863, Education Credits

Form 5695, Residential Energy Credits

Schedule 2, Form 1040A, Child and Dependent Care Expenses for Form 1040A Filers

Form 8396, Mortgage Interest Credit

The good news is that the IRS will be ready receive those forms Feb. 11, according to Clay
Sanford, a spokesman for the agency.

Computer software like TurboTax with online support will automatically update to account for the
last-minute change, said Colleen Gatlin, spokeswoman for Intuit, the makers of TurboTax.
"We're ready to go," she said. "If you have one of these tax credits and use our software, we will
send you the updated changes in law to your software via the Internet."

Sales tax

State and local sales-tax deductions live on for now. Texans have been able to deduct their sales
taxes since 2005 after an 18-year dry spell and will again for '07 filings. Be sure to add up your
sales receipts, or use the charts provided by the IRS for an acceptable number. And don't get too
used to the deduction; it expires again at the end of the year, so it won't be an option for '08 filings
unless Congress reinstates it.

Remember that the IRS table is just for state sales-tax estimates and does not include local sales
tax, which is 2 percent in Fort Worth, for example. If you want the full deduction under the tax law,
then you have to add on your local tax rate in a worksheet provided by the IRS in Form 1040.

If you don't know your local sales tax, it's pretty easy to find. Go to the state comptroller's Web
site at In a quick link on the right side of the home page, go to "Local
Sales Tax Rates." Enter your city and county and the rate assessed in your area will pop up.

And don't forget the other major add-on to the IRS tables built into the tax law -- the sales taxes
paid on cars, boats, aircraft, mobile or prefabricated homes or home-building materials purchased
last year. Only the state sales taxes can be added on to the IRS table for these purchases,
though, not the local taxes.

Earned income tax credit

Get more with the earned income tax credit. The IRS estimates that up to 25 percent of eligible
taxpayers nationwide fail to claim the credit, Sanford said. That figure holds true especially in
Texas. The EITC is a federal income-tax credit for low-income working individuals and families
established in 1975.

The IRS says that for 2007, the maximum credit is $4,716 with two or more qualifying children;
$2,853 with one qualifying child; and $428 with no qualifying children.

To qualify, you must earn an adjusted gross income of less than $37,783 ($39,783 if married and
filing jointly) with two or more qualifying children; $33,241 ($35,241 if married filing jointly) with
one qualifying child; or $12,590 ($14,590 if married filing jointly) with no qualifying children.

TurboTax is offering its tax-consulting service for free through January. Submit a question at, and an IRS-enrolled agent and TurboTax employee will call you back
with an answer at the time you request.

The Star-Telegram's fourth annual CPA hot line. To get your tax questions answered free from
the Fort Worth Chapter of the Texas Society of CPAs, call the Star-Telegram at 817-390-7333
from noon to 4 p.m. Feb. 10. A Spanish-speaking CPA will be on hand to take calls at 817-390-

IRS customer service hot line, 800-829-1040, or go to the agency's Web site at

Description: 2007 Irs Earned Income Tax Credit Table document sample