Tax Law Changes 2007

Cash Contributions – Receipts Required!

Drop a couple of bucks into Santa’s bucket for a charity at the mall?  No deduction!  Unless you have a written receipt or a cancelled check, your deduction will not be allowed.  No more “out-of-pocket” claims. 

Pension Plans

A host of changes will make retirement plans more accessible to workers.  Expect to see lots of information and increased flexibility form employers over the next couple of years.  In addition, 38 changes made in 2001 will not expire as planned, but have been extended indefinitely.

Inherited Pensions

If you inherit any form of retirement savings, you will be able to do a “roll-over” of the funds into your own IRA after 2006.  Formerly, only spouses could do a roll-over.  Other inheritors were forced to begin taking distributions (and paying taxes) the following year.

Contributions by Businesses

The special Katrina Relief tax act gave special breaks to businesses for contributing food or inventory items.  These were extended through 2007. 

Reporting Tax-Exempt Interest

Forms 1099 will show interest earned on tax-exempt municipal bonds and bond funds this year.  The interest is not taxable, but it can affect the amount of taxable Social Security.  You are required to report this income even though it is not taxed.   

Small changes

Several small changes will be seen.  More returns may be filed electronically.  More options are provided for electronic deposit of refunds.  The election to deduct costs of new equipment instead of taking depreciation is still available and will continue.  New retirement contribution limits are detailed in the tax tips section.