More Tax Help For 2007 -- But You Better Start Reading Now

I received my copy of J.K. Lasser’s “Your Income Tax 2007” in the mail this week. The cover of the book — really, it’s the size of a telephone book and uses something that feels like newsprint for the paper — boasts that 39 million copies have been sold.

Perhaps. But how many of those copies have been read cover to cover? I’ll bet not too many. And that’s too bad, since there are a load of gems tucked away in these pages.

The book is used for preparing your 2006 tax return, and there are a bunch of tax changes you’ll want to read about, including:

Retroactive expansion of the “Kiddie Tax” — investment income of dependent minors 18 years old and younger will be taxed at their parents’ top rate when it exceeds the threshold.
Donors are facing stricter rules for the contributions of used clothing and household goods made after August 17, 2006 — items must be in “better than used” conditions. The IRS will deny deductions for goods that are of minimal monetary value.
Exclusion for direct donations from IRAs of up to $100,000 — If you’re 70 1/2 and older, you can make a direct distribution to qualified charities and exclude from income up to $100,000. These direct distributions satisfy your yearly minimum distribution requirement. So now you can give from your IRA instead of withdrawing cash as income.
AMT Exemptions rise to $62,550 for joint filers, $42,500 for singles and $31,275 for heads of households — which means many more people will get caught by the AMT and have to pay more taxes (nice silent tax increase!)
Increased tax credits for residential energy improvements of up to $500 for replacement of energy-efficient windows, doors, heating and cooling systems.
Reduction of exemption phase-outs for high-income taxpayers — one-third of the previously disallowed amount is now allowed. By 2010, the phaseouts will disappear entirely.