What's New in Taxation For 2007
INDIVIDUAL TAX
New recordkeeping requirements for cash contributions
You cannot deduct a cash contribution, regardless of the amount, unless you keep as a record of the contribution a bank record (such as a canceled check, a bank copy of a canceled check, or a bank statement containing the name of the charity, the date, and the amount) or a written communication from the charity. The written communication must include the name of the charity, date of the contribution, and amount of the contribution. (IRS Publication 526)
Clothing and household items
You cannot take a deduction for clothing or household items you donate after August 17, 2006, unless the clothing or household items are in good used condition or better. (IRS Publication 526)
Mortgage Insurance Deductible on Schedule A
Premiums paid in 2007 for "qualified mortgage insurance" in connection with buying a home will be allowable as an itemized deduction on Schedule A. However, the amount you can deduct will be decreased by 10% for every $1,000 ($500 if Married Filing Separately) of adjusted gross income (AGI) over $100,000 ($50,000 if MFS). Mortgage insurance premiums you paid or accrued on any mortgage insurance contract issued before January 1, 2007, are not deductible as an itemized deduction.
BUSINESS TAX
Husband & Wife Unincorporated Businesses
Under the 2007 Small Business Tax Act a husband and wife who file a joint return and operate an unincorporated business can elect to be treated as sole proprietors for federal tax purposes. Previously these types of entities were considered to be partnerships and Form 1065 was required to be filed. Instead, each spouse would file a Schedule C of Form 1040 to report each's share of income and expense. This treatment is available for tax years beginning after December 31, 2006.