January, 2009
Tax Update
Key Exemptions and Deductions
Personal Exemptions:
Personal Exemption for each qualifying
dependent increased by $100 for 2008
to $3,500.
Standard Deductions:
The new standard deductions for those
who do NOT itemize are as follows:
Married Filing Joint $10,900
Head of Household $8,000
Single $5,450
Standard Mileage Rates
The standard mileage rates for 2008
and 2009 are:
Jan-July Aug-Dec
2008 2008 2009
Business $.505 $.585 $.55
Charitable Work $.14 $.14 $.14
Medical/Moving $.19 $.27 $.24
Social Security Earning Limits
The maximum amount of income subject
to social security tax is $106,800.
Individuals under 65 can earn up to
$14,160 without losing benefits.
Individuals who turn 65 in 2009 can
earn up to $37,680
Earned Income Credit Amounts
The maximum amount of earned income
and qualify for the credit is
$38,646 with two children ($41,646 if
married filing joint)
$33,995 with one child ($36,995 if
Married filing joint)
$12,880 with no children ($15,880 if
Married filing joint)
Woods Tax & Accounting Service
Miriam Woods
707 Cherry St., Charlotte, MI 48813
Website: www.woodstaxservice.com
Email: info@woodstaxservice.com
Phone: 517-543-5629 or 517-231-1634 cell
What’s New for 2008 tax year?
Recovery Rebate Credit
The 2008 Economic Stimulus Act of 2008 contained provisions for stimulus checks to be
mailed out beginning in May, 2008. If you did not qualify or did not receive the maximum
amount for your stimulus payment you may be entitled to a recovery rebate credit when you
file your 2008 tax return. Bring the amount of payment you received in 2008 which can be
found on your Economic Stimulus Payment Notice or by going to IRS.gov and clicking on How
Much Was My 2008 Stimulus Payment.
First-
First-Time Homebuyers Tax Credit
First-time homebuyers should begin planning now to take advantage of a new tax credit avail-
able for a limited time. The credit applies to primary home purchases between April 9, 2008,
and June 30, 2009. Normally, this tax credit must be paid back in equal payments over 15
years. The credit is 10 percent of the purchase price of the home, with a maximum available
refundable tax credit of $7,500 for either a single taxpayer or a married couple filing
jointly. First-time homebuyers are those who have not owned a home in the three years prior
to a purchase.
Real Estate Tax Deduction
If you pay real estate taxes but are not able to itemize your deductions, there is an additional
standard deduction for 2008 and 2009. The amount is equal to the amount of real estate
taxes paid up to $500 for single filers and $1000 for joint filers.
Energy Tax Credit
Up to a $500 credit is available for tax years 2009 to 2016 (NOT 2008) for the installation of
energy efficient improvements made to your main home. This is the same credit that was
available for 2006 & 2007. Items that are eligible include installation systems that reduce
heat loss/gain, exterior windows, exterior doors, metal roofs, main air circulating fan, furnace,
solar panels, solar water heating equipment or a fuel cell power plant.
Charitable Contributions
To deduct any charitable donation of money, you must have a bank record, credit card state-
ment or a written communication from the recipient showing the name of the organization
and the date and amount of the contribution.
(Continued on page 2)
Page 2 Tax Update

Mortgage Forgiveness Debt Checklist of what to bring to your tax appointment

Relief Act of 2007
Following a foreclosure where
the home sells for less than the
borrower’s outstanding mort-
gage, the lender forgives all or
part of the unpaid mortgage
debt. Normally that cancelled
debt would be considered in-
come by IRS. However this new
law will now exclude the
“income” from the forgiveness
of debt if it is secured by a prin-
cipal residence. This special
relief is available for six years
beginning Jan. 1, 2007 through
2012.
College Tuition & Expenses
Up to $4000 in Tuition & fees
can be deducted on the front of
the 1040.
The Hope Credit and Lifetime
Learning Credit are still avail-
able. The Hope Credit can be
up to $1500 and the Lifetime
Learning credit is 20% of quali-
fied tuition up to $2000.
Reduced Capital Gain Rates
Capital Gains and dividend in-
come are taxed at a maximum
rate of 15% through 2010.
Taxpayers in the 10% and 15%
tax brackets will be taxed for
capital gains at a 0 (zero)% rate
for tax years 2008, 2009 and
2010.
□ All W-2 forms
□ Social Security numbers and birthdays for taxpayer, spouse & children
□ Amount of interest, dividends and capital gains received (income or losses)
□ Amount of state & local refunds received last year
□ All income and expenses related to your business
□ Auto mileage for business or rental properties— total mileage & business miles on vehicle
□ All 1099 forms received confirming income from retirement, disability, gambling winnings
□ Amount of Unemployment Compensation received
□ Amount Social Security Benefits received
□ Amount of rental property income and expenses
□ Amount of IRA contributions
□ Amount of Student Loan interest paid
□ Amount paid for child care including provider's SS# or Fed. ID# and address.
□ Amount of higher education expenses (tuition & fees) paid in 2008
□ Amount of health insurance premiums paid
□ Real estate property tax bills showing amount assessed & paid for your property in 2008
□ Amount of Michigan Sales Tax paid in 2008 if you purchased a car, boat or motorcycle
□ 2008 Taxable value of your home (for MI Homestead Credit)
□ Amount paid for auto license fees (autos, trailers, boats, etc)
□ Year-end statement of mortgage interest (Form 1098) and escrow activity on mortgage
□ Charitable contributions (cash, non-cash gifts, mileage)
□ Sale of Home in 2008 - closing papers when bought & sold
□ Amount of job related expenses & union dues
□ Amount of 2008 Estimated Tax Payments (Federal & State)
□ Amount of purchases bought on Internet/ catalog (for MI Sales Tax)
□ Amount of rent paid in 2008, name and address of landowner
□ 2007 income tax return (unless prepared by Woods Tax Service)
□ Direct Deposit information: bank account no. & routing no.
2008 Tax Rates
The following shows the 2008 income brackets for each tax rate.
Tax Rate Single Married Filing Joint Head of Household
10% $1—$8,025 $1—$16,050 $1—$11,450
15% $8,026—$32,550 $16,051-$65,100 $11,451-$43,650
25% $35,551-$78,850 $65,101-$131,450 $43,651-$112,650

All returns will be 28% $78,851-$164,550 $131,451-$200,300 $112,651-$182,400

33% $164,551-$357,700 $200,301-$357,700 $182,421-$357,700
electronically-
electronically-filed
35% over $357,701 over $357,701 over $357,701
FREE!