Here is a synopsis of some uncertainties, from CCH, http://accounting.smartpros.com/x59470.xml:
▸ In 2006, the AMT exemption amounts were $42,500 for single individuals and $62,550 for married couples filing jointly, but these amounts lapsed and are now set for 2007 to revert to just $33,750 for individuals and $45,000 for married couples filing jointly.
▸ The "phaseout" on itemized deductions that applies to taxpayers above certain income levels will be lessened by two-thirds in 2008.
▸ For seniors required to make withdrawals from their IRAs, the end of 2007 closes a window of opportunity for avoiding taxes on them, unless Congress extends a short-lived tax break. If a distribution of up to $100,000 is made directly to a charity, it can be excluded from income.
▸ Recent pension legislation allows the option to fund a non-deductible IRA with an eye toward rolling it over into a Roth IRA in 2010. This does not reduce current taxes, but promises tax-free withdrawals from the Roth IRA in future years. In addition, Roth IRAs are not subject to minimum-distribution rules as other IRAs are.
▸ Absent new legislation, this is the last year for which you can take an itemized deduction for state and local sales tax. This year also sees the last of the qualified tuition deduction, an "above the line" deduction valuable even if you can't itemize. The ability of educators to take an above the line deduction for school supplies expires at year-end, also.
▸ The credits for many types of home energy-saving improvements expire at the end of 2007. A number of energy-saving improvements to the home can earn up to $500 in tax credits – and up to a $2,000 credit for major solar systems such as photovoltaics or a solar-powered hot water system.
▸ A hybrid car qualifies for a full credit only until the manufacturer has sold 60,000 qualifying vehicles – then the credit phases out.
▸ The Small Business and Work Opportunity Tax Act of 2007 raised the applicable age for the "kiddie tax" on which unearned income above a minimum amount is taxed at the parent's rate. Before 2007 ends, only those who have not turned 18 by year's end are subject to the kiddie tax. For 2008 and after, the age rises to 19, but full-time students who remain dependents are subject to the kiddie tax until age 23.
The original CCH article can be viewed here.
