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Date: November 28, 2007
Subject: G&G Tax Tip - IRS releases 2008 tax numbers

This is
G&G Associates
Tax & Financial Consulting Services
e-Newsletter


IRS Announces 2008 Standard Mileage Rates;

Rate for Business Miles Set at 50.5 Cents per Mile

WASHINGTON — The Internal Revenue Service today issued the 2008 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes. Beginning Jan. 1, 2008, the standard mileage rates for the use of a car (including vans, pickups or panel trucks) will be:
* 50.5 cents per mile for business miles driven;
* 19 cents per mile driven for medical or moving purposes; and
* 14 cents per mile driven in service of charitable organizations.

The new rate for business miles compares to a rate of 48.5 cents per mile for 2007. The new rate for medical and moving purposes compares to 20 cents in 2007. The rate for miles driven in service of charitable organizations has remained the same.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile; the standard rate for medical and moving purposes is based on the variable costs as determined by the same study. Runzheimer International, an independent contractor, conducted the study for the IRS.

The mileage rate for charitable miles is set by law. A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS), after claiming a Section 179 deduction for that vehicle, for any vehicle used for hire or for more than four vehicles used simultaneously. Revenue Procedure 2007-70 contains additional information on these standard mileage rates.

The IRS released the inflation-adjusted tax numbers for 2008 somewhat early this year. I thought you might find this brief summary of 2008 numbers useful in your work.

* ADOPTION TAX CREDIT increases to $11,650.

* ESTATE TAX top rate remains at 45%, and the exemption
amount remains at $2 million.

* ANNUAL GIFT TAX exclusion remains at $12,000.

* SECTION 179 expensing limit increases to $128,000.
Phase-out threshold increases to $510,000.

* 401(k) maximum salary deferral remains at $15,500
($20,500 for 50 and older).

* SIMPLE maximum salary deferral remains at $10,500
($13,000 for 50 and older).

* IRA contribution limit increases to $5,000 ($6,000
for 50 and older).

* SOCIAL SECURITY taxable wage limit increases to
$102,000. Retirees under age 65 can earn up to $13,560
without losing benefits.

* KIDDIE TAX threshold increases to $1,800. The tax
will apply up to age 19 in 2008 (up to age 24 for
full-time students).

* NANNY TAX threshold increases to $1,600.

* HOPE CREDIT maximum increases to $1,800.

Thanks
Gary Gray
Tax & Financial Consultant, RFC
G&G Associates
877-817-6031 toll-free
866-361-3872 toll free fax
www.gngassociates.net

"The more you learn the more you earn, the less you know the more you owe."
S. Botkin

 

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