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Emergency Economic Stabilization Act of 2008
On October 3, 2008, President Bush signed the Emergency Economic Stabilization Act of 2008. The Act was primarily designed to provide stability to the economy and prevent further disruption to both the financial system and taxpayers alike. However, this massive piece of legislation also contains a wide range of tax and financial provisions for individuals and businesses.
While there are numerous provisions, the following highlights some of the key provisions:
- Alternative Minimum Tax (AMT) Patch
This temporary fix will protect more than 20 million Americans from paying the AMT tax in 2008. For married couples filing jointly, the 2008 exemption is $69,950. For singles and heads of households, it's $46,200, and for married filing separately, it's $34,975.
- Extension of State and Local Sales Taxes Deduction. Taxpayers can deduct state and local sales taxes from their federal returns for 2008 and 2009, rather than state and local income taxes. The tax break is especially important for people in states that have state or local sales tax but don't have state income tax - Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. But it might also give a larger deduction to taxpayers who paid more in sales taxes than income taxes because they bought a new car or other expensive items.
- Extension of the Research Tax Credit. This provides an incentive for businesses to invest in the development of new products and technologies. The law extends the credit to amounts paid or incurred through December 31, 2009.
- Extension of Tax Incentives For Broad-Based Renewable Investments. This includes wind energy, solar energy, biofuels, and other renewable energy investments. In addition, there are new tax breaks for solar and wind investments made to residential property.
- Extension of Credits For Energy-Efficient Improvements to Existing Homes. This is applicable to various ?energy-efficient? home upgrades, including energy-efficient doors and windows. These credits have been extended through 2009.
- Extension of Nontaxable IRA Transfer to Charities. Taxpayers age 70.5 and older can continue to contribute an IRA distribution of up to $100,000 to an eligible charity and exclude the amount from income.
- Extension of the Higher Education Tuition Deduction. Qualified taxpayers can deduct qualified higher education expenses of up to $2,000 or $4,000 (depending on income) paid on behalf of themselves, their spouses, or their dependents.
For more information, please contact coheninfo@cohencpa.com.
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