What's New on Your 2007 Tax Return

As you scan the forms and schedules for the 2007 income tax return, be sure to note several changes that can help you save money and make filing easier. Key changes include:

Husband-wife businesses

Spouses who co-own a business that would ordinarily file as a partnership can opt to file Schedule Cs with their Form 1040, rather than Form 1065 as long as they both materially participate and they file a joint tax return.

Increased first-year expensing

The cost of business equipment purchased and placed in service in 2007 can be deducted up to $125,000. The limit is reduced if equipment purchases for the year exceed $500,000.

Business vehicles

The standard mileage rate for business driving in 2007 is 48.5¢ per mile. The first-year depreciation limit for a car placed in service in 2007 is $3,060 ($3,260 for a light truck or van).

Domestic production activities deduction

The deductible percentage increases to 6% in 2007 (up from 3% in 2006).

Contribution limits

The amount that can be contributed to qualified retirement plans, such as profit-sharing and 401(k) plans, and to health savings accounts (HSAs) in 2007 have been increased.