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EDUCATION

Tax Update for Family Child Care Providers in 2007 & 2008 ----- Source:  Don Gilbo, CPA from Vancouver

Cash Donations:  Cash, check, or other monetary gifts made after August 17, 2006, will be disallowed a deduction unless you have a receipt that shows the name of the donee organization, the date of the contribution, and the amount of the contribution.

Energy Credit:  Energy efficient homeowners may be able to claim two tax breaks:  The $500 lifetime credit for nonbusiness energy property (through 2008) and the 30%-of-cost credit for residential energy efficient property (through 2007).  Available if you purchased windows, a main fan, a furnace, a hot-water boiler, a heat pump, a central air conditioner, and a water heater.  The credit is available on the personal percentage use only.

Health Insurance Deduction for Self-Employed Individuals:  A sole proprietor can buy insurance in the name of the individual sole proprietor rather than the name of the business.  You can deduct 100% of the total amount paid in health insurance coverage established for you, your spouse, and your dependents up to the amount of the net profit in your business.  But if you were also eligible to participate in any subsidized health plan maintained by you or your spouse's employer for any month or part of a month, amounts paid for health insurance coverage for that month cannot be used to figure the deduction.

IRA Tax Credit:  Has been permanently extended.  You may qualify for this credit if your adjusted gross income is $50,000 or less (married filing jointly), $37,500 or less (head of household), or $25,000 or less (single or married filing separately).  The credit is calculated based on contributions to any qualified IRA up to $2,000 per person per year.  The credit ranges from 10% to 50%.  See the chart on Form 8880.

Mileage Rate:  

Business                       2007.....48.5c a mile             2008.....50.5c a mile

Moving/Medical            2007.....20.0c a mile             2008.....19.0c a mile

Charitable                     2007.....14.0c a mile             2008.....14.0c a mile

Non-cash Donations:  After August 17, 2006 no deduction is allowed for contributions of clothing and household items that are not in good used condition or better.  Or, of minimal monetary value, such as used socks or undergarments.

Delay in Filing:  In a news release, IRS says that late enactment of an AMT patch for 2007 will cause a delay in filing the following five forms until February 11, 2008:

*  Form 8863, Education Credits

*  Form 5695, Residential Energy Credits

*  Form 1040A, Schedule 2, Child and Dependent Care Expenses

*  Form 8396, Mortgage Interest Credit

*  Form 8859, District of Columbia First-Time Homebuyer Credit

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