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Expect some changes when you fill out your income tax return this year.
Among the differences: the exemption for the Alternative Minimum Tax has beein increased, some deductions and tax credits that were due to expire have been extended and many people will benefit from a new standard property tax deduction or special credit for first-time homeowners. Incentives to encourage saving for retirement also have been expanded.
Here are some of the highlights of this year’s the tax-law changes, as described by the Internal Revenue Service.
Economic Stimulus Payments Tax Free
Economic stimulus payments are not taxable, and they are not reported on 2008 tax returns. However, the stimulus payment does affect whether a taxpayer can claim the Recovery Rebate Credit and how much credit he or she can get. The credit is figured like last year’s economic stimulus payment except that the amounts are based on tax year 2008 instead of 2007. A taxpayer may qualify for the Recovery Rebate Credit if, for example, she did not get an economic-stimulus payment or had a child in 2008. In most cases, the IRS can figure the credit. The instructions for Forms 1040, 1040A and 1040EZ have more information.