Monday, March 26, 2007

10 new tax laws you need to know

Lawmakers were busy in 2006, so be sure to check out these tax code changes. They might save you some money, if you haven't filed your taxes already. Bankrate.com lists 10 new laws that might affect what you receive back from the IRS.

    1. Telephone tax credit
      One of the most welcome tax changes comes not from Congress but from the Internal Revenue Service, which decided last year to stop collecting the 3 percent federal telephone excise tax. …


    2. Multiple direct deposit option
      If the phone rebate bumps up your refund amount, the IRS is making it easier for you to save instead of spend that money. You can now have your tax refund divided and directly deposited into up to three accounts. …


    3. Energy-saving home improvements
      If you replaced your home's drafty windows last year with new, energy-efficient panes, make sure you file the long Form 1040, along with Form 5695, to get the corresponding tax credit. That's just one way to take advantage of the energy-efficient home improvement provisions included in the energy bill that took effect Jan. 1, 2006. …


    4. Alternative fuel auto credit
      Did your environmental concerns extend to the road? Then you might be able to drive away with substantial tax savings. …


    5. Tougher donation rules
      Tax breaks for charitable gifts provide rewards for both donors and their favorite nonprofit groups. In 2006, however, lawmakers decided some taxpayers had been pushing the goodwill envelope a bit too far. So beginning on Aug. 18, any donated clothing or household goods must be in good or better condition. …


    6. Older philanthropist options
      Some charitable giving, however, got easier thanks to tax-law changes. Now if you're 70½ or older, you can transfer money directly from an IRA to a charitable organization.


    7. Kiddie tax tightened
      In order to save for their child's college costs, some parents open accounts in the child's name. …


    8. Foreign income adjustments
      U.S. workers with jobs abroad will likely find they're now paying a higher tax price for their globe-trotting careers because of changes to the foreign earned income exclusion rules. …


    9. Rolling over retirement money
      However, if you're planning to someday retire abroad instead of work there now, some law changes can help you build up your post-career nest egg. To encourage workers to take their company retirement plans when they leave a job, the new Pension Protection Act of 2006 will soon allow departing employees to transfer that money directly into a Roth IRA. …


    10. Old deductions are new again
      Three popular tax breaks technically died at the end of 2005: deductions for state sales taxes, educators' classroom expenses and college tuition and fees. They were resurrected at the very end of the 2006 congressional session and are back in force through 2007, just as they were previously. …


10 new tax laws you need to know at Bankrate.com

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