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2007 Tax Year Changes

Dear Clients and friends:

From the staff of Airline Crew Taxes, we all hope you had an enjoyable holiday season with your family and loved ones, a good year in 2007, and look forward to a prosperous 2008.

With many pilot, flight attendant, and airport staff new hires, we are preparing for a busy 2008 tax season. We expect a large number of new clients due to referrals, and ask that you please tell your friends and co-workers about us. With anticipation of this growth we have increased staffing and will be working late office hours to keep up with demand. With the added staff and longer hours, we feel we will be able to improve on our processing and turn around time.  We have enclosed your 2007 tax organizer for you to start organizing your information for your tax return preparation.

We would like to be your choice for tax preparation again! Please remember that you can:

1)      Fill out the organizer and mail it back with any tax related documents you may have.

2)      Fax your tax organizer and tax related documents to our office (unlimited toll free fax).

3)      Go to our website and complete our paperless forms (recommended if you do not have numerous tax forms, ie.W2’s, 1098’s, 1099’s, etc.).

4)      Visit our office. An appointment is recommended, but walk-ins are welcome.

We are getting close to tax season and would like to inform you of certain changes the IRS has made for the 2007 tax year.

Some Tax Changes For 2007 Tax Returns are:

ALTERNATIVE MINIMUM TAX

The following credits are no longer allowed against the AMT: Credit for child and dependent care expenses, credit for the elderly or the disabled, education credits, residential energy credits, mortgage interest credit. Also the additional exemption amount for providing housing for Hurricane Katrina victims is no longer allowable for the AMT.

Note: All tax rate tables increased and this made more taxpayers fall into the wrath of the Alternative Minimum Tax; this together with the above mentioned changes makes it a challenging year for taxpayers and tax preparers. We will stay abreast of any congressional changes that may  alleviate the AMT burden, as well as find and apply every possible tax credit and deduction that may help your particular tax situation.    

CHARITABLE CONTRIBUTIONS

Taxpayers must now keep a record of cash contributions of any amount. Examples of receipts are cancelled checks, a bank copy of a cancelled check, a bank statement containing the name of the charity with date and amount, or a receipt from the charity with date and amount of contribution.

EARNED INCOME CREDIT

The minimum earned income amount used to figure the additional child tax credit has increased to $11,750. The amounts of credit have increased as follows:

• $2,853 if you have one qualifying child
• $4,716 if you have more than one qualifying child
• $428 if you do not have a qualifying child

The maximum amount of income you can earn and still get the credit has increased for 2007. You may be able to take the credit if:

• You have more than one qualifying child and you earn less than $37,783 ($39,783 if married filing jointly)
• You have one qualifying child and you earn less than $33,241 ($35,241 if married filing jointly)
• You do not have a qualifying child and you earn less than $12,590 ($14,590 if married filing jointly)

Nontaxable combat pay election has been extended. You can choose to have your nontaxable combat pay included in earned income when you figure your earned income credit for 2007.

     STANDARD MILEAGE RATES

Business-related mileage: For 2007, the standard mileage rate for the cost of operating your car for business use is .48.5 cents per mile. Medical and move related standard mileage rate is increased to .20 cents per mile, while standard rate for charitable mileage remains .14 cent per mile.

EXPIRED TAX BENEFITS

Several tax favored items related to Hurricane Katrina, Rita, and Wilma have expired and will not apply for 2007. (Consult your tax advisor for specifics)

The qualified electric vehicle credit will not apply for any vehicle placed in service after 2006. 

TAX PLANNING IDEAS FOR 2007 AND BEYOND

Employee / Employer contributions allow taxes to be deferred on the amounts contributed to a retirement plan. The contributions are fully deductible, thereby reducing tax liability for taxpayer. IRA’s offer the same benefit with a maximum contribution limit of $4,000 per year. Taxpayer is eligible for prior year IRA credit as long as the IRA has been funded by April 15^th of current year. We always suggest funding as much as you can to your 401K as this money goes into your retirement account on a pre-tax basis. This saves you a considerable amount in taxes as it reduces your total taxable income, it is a great deal. We understand it is sometimes difficult to contribute to your 401K, but keep in mind, if you don’t see it, maybe you won’t miss it. We know it is easier said than done, but we cannot stress it enough. Make an attempt to contribute as much as you can to your 401k and we promise we will make every attempt to save you money in taxes, we will try to maximize every available deduction and credit. Our job is saving you money in taxes, and we intend to do just that.

Always remember to be charitable, especially with non cash items that you no longer need. (Items such as clothing, furniture, and house wares) Try to make several drops during the year (aim for 3 or 4) as each drop could be itemized and given maximum value for deductions (please obtain a receipt). We use software that gives value to the items donated; all you have to do is list what you donated and the quantity of the items donated. You can do this at most non profit resale shops like Goodwill, Salvation Army, Purple Heart, etc. This can turn out to be a sizeable deduction.

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