Major Tax Changes for 2008

Tax season is here and the nation's smallest businesses should take note of significant tax changes for 2008 as they get their paperwork in order.

The National Association for the Self-Employed put together a handy list for micro-businesses and the self-employed. It's also hosting a series of tax seminars around the country beginning mid-March.

First-Time Homebuyer Credit - More than half of all U.S. businesses are based out of an owner's home, so new home buyers should note this 2008 tax incentive: Offices located inside a first-time home purchase might qualify for tax incentives if the house was bought between Apr., 2008, and June 30, 2009. The $7,500 credit is very similar to a 15-year interest-free loan, according to Keith Hall, tax advisor to the NASE.

Standard Mileage Rates - The standard mileage rate for business use of a car, van, pick-up or panel truck is 50.5 cents per mile from Jan. 1, 2008, to June 30, 2008. The rate is 58.5 cents for each mile driven during the remainder of the year.

Contribution Limits for IRAs/Other Retirement Plans - If an IRA contributor who is not covered by a workplace retirement plan is married to someone who is covered, the deduction is phased out if the couple's income is between $159,000 and $169,000.

AMT Exemption Increased for 2008 - For tax-year 2008 only, the exemption for a married couple filing a joint return is $69,950, up from $66,250 in 2007; $34,975 for a married person filing separately, up from $33,125 and $46,200 for singles and heads of household, up from $44,350.

Talk to the IRS - The IRS is reaching out to taxpayers who are unable to meet their obligations during this economic slump with tax credits, deductions and additional outreach. Visit www.IRS.gov or its small business page for more information on how the agency is working to help business owners in financial distress. Another good resource is Business.gov, which offers small business resources for the self-employed and home-based businesses, among other things.

By Sharon McLoone |  January 29, 2009; 8:00 AM ET Tax Tips
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