General Tax Changes.

The 2007 amounts for Personal Exemptions is now $3,400. For those without a large amount for itemized deductions the standard deductions are as follows:

Singles and Married Filing Separate	$5,350
Head of Household	$7,850
Married Filing Jointly	$10,700

Itemized Deduction Updates

Car Expenses

Standard Mileage Rates for 2007

As we all know the price for gasoline has gone up dramatically... Beginning Jan. 1, 2007 Standard mileage rate use of a car (including van, pickups, or panel trucks) will be:

• 48.5 cents per mile driven for business driven miles
• 20 cents per mile driven for medical or moving purposes
• 14 cents per mile driven in service to charitable organizations

We can provide assistance and advice in this formidable IRS regulation. A log of the travel should be a priority.

Charitable Contributions

Beginning in 2007, you cannot deduct a cash contribution, regardless of the amount, unless you keep a bank record or written communication from the charity as evidence. A bank record could be a cancelled check, bank copy of a cancelled check, or a bank statement containing the name of the charity, date and amount of contribution. The written communication needs to include charity name, date and amount. After February 13, 2007 you cannot deduct a contribution to a donor advised fund if the sponsoring organization is a war veterans' organization, fraternal society, or nonprofit cemetery company.

As prescribed, donations of motor vehicles, boats, and aircraft have reporting requirements. The charitable contributions have new rules limiting the deductible amount of a taxpayer's donation to the true disposal value of the vehicle.

IRA Contribution

The maximum IRA contribution allowed per person continues to be $4,000 in 2007. Also through 2007, those who are at 50 years or older can contribute an additional $1,000.

Retirement Plan Elective Deferral Limits

An employee's maximum salary deferral to a 401(k) plan, a tax-sheltered 403(b) annuity, a salary reduction simplified employee pension (SEP) plan, or a government-sponsored 457 plan increases to $15,500 in 2007 and 2008. Those 50 years or older can make additional catch-up contributions to their plans of $5,000. Elective deferrals to a SIMPLE plan increase to $10,500. SIMPLE plan participants who are age 50 and over can make additional catch-up contributions of $2,500 in 2007 and 2008.

Automatic Six Month Filing Extension

The IRS has extended from four months to six months the period for which individuals may obtain an automatic extension of time to file their income tax returns by filing Form 4868, application for Automatic Extension of Time to File U.S. Individual Income Tax Return

Next Year Filing Changes 2007
Tax Brackets Increase

Tax brackets have been adjusted for inflation to produce the following for 2007.

Schedule X — Single

If taxable income is over--	But not over--	The tax is:
$0	$7,825	10% of the amount over$0
$7,825	$31,850	$782.50 plus 15% of the amount over 7,825
$31,850	$77,100	$4,386.25 plus 25% of the amount over 31,850
$77,100	$160,850	$15,698.75 plus 28% of the amount over 77,100
$160,850	$349,700	$39,148.75 plus 33% of the amount over 160,850
$349,700	no limit	$101,469.25 plus 35% of the amount over 349,700

Schedule Y-1 — Married Filing Jointly or Qualifying Widow(er)

If taxable income is over--	But not over--	The tax is:
$0	$15,650	10% of the amount over$0
$15,650	$63,700	$1,565.00 plus 15% of the amount over 15,650
$63,700	$128,500	$8,772.50 plus 25% of the amount over 63,700
$128,500	$195,850	$24,972.50 plus 28% of the amount over 128,500
$195,850	$349,700	$43,830.50 plus 33% of the amount over 195,850
$349,700	no limit	$94,601.00 plus 35% of the amount over 349,700

Schedule Y-2 — Married Filing Separately

If taxable income is over--	But not over--	The tax is:
$0	$7,825	10% of the amount over$0
$7,825	$31,850	$782.50 plus 15% of the amount over 7,825
$31,850	$64,250	$4,386.25 plus 25% of the amount over 31,850
$64,250	$97,925	$12,486.25 plus 28% of the amount over 64,250
$97,925	$174,850	$21,915.25 plus 33% of the amount over 97,925
$174,850	no limit	$47,300.50 plus 35% of the amount over 174,850

Schedule Z — Head of Household

If taxable income is over--	But not over--	The tax is:
$0	$11,200	10% of the amount over$0
$11,200	$42,650	$1,120.00 plus 15% of the amount over 11,200
$42,650	$110,100	$5,837.50 plus 25% of the amount over 42,650
$110,100	$178,350	$22,700.00 plus 28% of the amount over 110,100
$178,350	$349,700	$41,810.00 plus 33% of the amount over 178,350
$349,700	no limit	$98,355.50 plus 35% of the amount over 349,700

Alternative Minimum Tax

The AMT exemption amount for 2007 has decreased to $33,750 for single people, $45,000 for married couples filing jointly or qualifying widow(er), and $22,500 for married couples filing separately.

And In The End...

Estate Taxes

The amounts that can be excluded from an estate for estate tax purposes will increase from $1.5 million to $2 million in 2006 through 2008, and $3.5 million in 2009. Estate taxes will be repealed for those dying in 2010, but may return unless Congress acts to make the repeal permanent.