TOP DRAWER ARTICLE

Taxes: What's New for 2007
by
HL Carpenter

Your current year taxes are filed, and you’re breathing a sigh of relief. But before you relax, take a minute to check out changes that might save you money on next year’s return.

Here’s an overview of four new or updated tax provisions:

Increased IRA deduction limits. Your deduction for contributions to a traditional IRA is limited when you’re an active participant in your employer’s plan and your adjusted gross income (AGI) exceeds a specified amount. For 2007, the AGI limit increases to $103,000 if you’re married filing jointly or a qualifying widow or widower ($62,000 for singles).

Higher standard mileage rates. For 2007, you can claim 48.5 cents a mile for business activities. The rate is 20 cents a mile if you use your car for medical reasons or a deductible move.

Note: Charitable mileage remains at 14 cents.

New way to fund a health savings account (HSA). In 2007, you can fund an HSA with money from your IRA. The maximum contribution is $2,850 for single coverage and $5,650 for family coverage.

New itemized deduction. If you take out a mortgage in 2007, you may be able to deduct some of the mortgage insurance premiums you pay during the year. Your AGI must be less than $110,000 if you’re married and filing jointly ($55,000 for married filing separately).

Originally published April 2007.

Last update: December 30, 2009