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2009-01-01

Taxes, the Emergency Economic Stabilization Act and you

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With another tax filing season quickly approaching, the National Association of Tax Professionals (NATP) is advising taxpayers about details of the recent Emergency Economic Stabilization Act of 2008 - and the affect it may have on their 2008 tax filing.
The following offers an overview of the key relief provisions included in the EES Act:

• additional Child Tax Credit - an increased amount of lower-income earners will be eligible for this credit because the earned income threshold has decreased from $12,050 to $8,500 beginning in 2008.

• qualified tuition deduction - the above-the-line tax deduction for qualified higher education expenses is extended through 2009. This deduction provides a benefit whether tax forms are itemized or not.

• teacher expense deduction allows teachers a deduction for up to $250 for educational expenses. This provides a benefit whether teachers itemize or not.

• IRA rollover provision allows qualified taxpayers to make tax-free contributions from their IRA plans to qualified charitable organizations.

• additional standard deduction for real property taxes - the standard deduction for real property taxes for those not itemizing is extended through 2009. Taxpayers who do not itemize can add the lesser of their real estate taxes or $500 - $1,000, if married - to the standard deduction.

• 15-year straight-line cost recovery for qualified leasehold, restaurant, and retail improvements enables improvements put in service before Jan. 1, 2010, to be written off over 15 years, not at the current standard of 39 years.

• Residential Energy Efficient Property Credit - the Emergency Economic Stabilization Act has reinstated an expired $500 credit for energy-efficient property such as doors, windows, water heaters and central air units. This credit is reinstated for the 2009 tax year, so residents considering energy-efficient improvements to their homes should do the improvements in 2009.

• Individuals are allowed a residential energy efficient property credit for expenditures for qualified solar electric property, qualified solar water heating property, and qualified fuel cell property. These credits have been extended eight years through 2016.

This is a sampling of some of the most important changes and extensions related to the recent Emergency Economic Stabilization Act. For specific information on how this affects you, contact a professional tax preparer. Tax professionals are experts who keep current on tax law changes. They can save you time and offer insight on how to use the tax breaks available to you.

To find a tax professional in your area or to learn more about NATP, visit www.natptax.com .