Taxpayers age 70 1/2 and older can move up to $100,000 a year out of their IRAs directly to one or more charities, tax free.
The maximum a worker under the age of 50 can contribute to one or more 401(k)s rises to $15,000 from $14,000 in 2005. If you are over 50 you can contribute a maximum of $20,000. Make sure you have adjusted your contribution accordingly.
The Pension Protection Act of 2006 made Roth 401(k) plans, which went into effect this year, permanent. As in a Roth I.R.A., after-tax dollars are contributed, rather than pretax dollars as has been traditional for retirement plans. But when retirement distributions, including earnings, are made from a Roth, they are exempt from income tax. That makes Roth plans especially attractive to upper-income business owners
Congress has increased the number of children whose income is subject to their parents' higher tax rate by raising the age limit. Under the old law the age limit was 14. The new law increases the age limit to 18.
New Energy Tax Breaks include a credit of up to $500 lifetime for energy-efficient improvements to your home, such as solar water heaters and solar electricity equipment. Credits may also be available for purchasing a hybrid or other alternate fuel source vehicle.
The
Pension Protection Act of 2006 extended through 2007 charitable provisions that
had been enacted after Hurricane Katrina in 2005. Like C corporations, for which
income is taxable on corporate returns, sole proprietorships, partnerships and S
corporations (for which income is taxable on owners’ individual returns) that
donate food from their inventory to charitable organizations caring for the ill,
the needy and infants may deduct up to 10 percent of their income; C
corporations are entitled to deductions for donating book inventories to public
schools.
The pension act also contains a tax savings device for those that can use it. Owners of S corporations that donate property through 2007 can take an income-tax deduction on their personal tax returns for fair market value, say $10,000, she said, but the donation reduces the value of the corporation’s stock by only its original cost, say $3,000. That sets the stage for two possible future benefits.
Updated January 26, 2007