Tax Insights — March 2008

Dear Client, Friends of Clients and Future Clients:

Welcome to Glazer Financial Networks periodic tax update.

Congress eased a one year fix for 2007 taxpayers keeping millions of taxpayers out of the reach of the Alternative Minimum Tax (AMT).

Higher exemptions for AMT:

$44,350 for single taxpayers and heads of household;
$66,250 for married couples filing jointly; and
$33,125 for married filing separately.

Allows the use of most nonrefundable personal credits to offset AMT liability.

Mortgage forgiveness of debt.

Exclusion of mortgage debt forgiveness from a Homeowner's income.

Discharges up to $2 Million of indebtedness that is secured by a principal residence and is incurred in the acquisition, construction or substantial improvements of the principal residence.

Three-year exception for debt forgiveness on qualified home loans:

Expanded time period for a surviving spouse to use higher income sale exclusion provided sale occurs no later than two years after the date of death of the individual's spouse;

A three-year extension of the mortgage insurance premium deduction;

Exclusion from income of certain state and local tax breaks given to firefighters and emergency medical technicians;

Clarification of student housing eligible for the low-income housing credit; and

More liberal qualification test for cooperative housing corporations.

Mortgage workouts are included. Includes refinancing of mortgage debt to the extent that refinancing does not exceed amount of the original indebtedness. Does not include funds not put back into the home but used to pay off credit card debt. Does not include vacation or other second residences.

Proposals — To curb offshore accounts and urge so-called tax haven countries to cooperate with U.S. requests for greater transparency.

If you have not set up a profit sharing or a defined benefit plan you still have an option to put away a retirement contribution;

If you want to put away more than your profit sharing contribution, please call, as there are some alternatives;

Home office expenses have become much simpler. As long the taxpayer uses the office regularly and exclusively for necessary administrative or management activities (such as billing) and doesn't use another fixed location for these functions.

A taxpayer also qualifies if he regularly uses the space to meet with clients and customers or if the office is in a structure separate from the residence;

If your children do work for you they should be on salary. Instead of allowances, compensation has to be reasonable and they have to actually work;

Can earn up to $5,650 with no income tax;

Can still be claimed as dependent if under 19 years of age or under age 24 and are full time students; and

If sole proprietor and child is under 18, no social security, Medicare or unemployment taxes need to be paid.

If you are a sole proprietor, hire your spouse and offer family coverage for all employees.

You then receive coverage under your spouse's policy;

Full cost of Medicare plan is deducted on Schedule C or F; and

Make sure that the employee/spouse is the primary insured on the policy and that premiums are paid from the business checking account.

Suffice it to say, our country's tax code is complex, big and getting bigger. If you have questions on how to navigate it successfully, please call me at 800-999-8931 or Email me at mglazer@glazerfinancial.com for a free "Lifestyle Plan" or to answer any questions. You can also contact us via our web site.

Best Regards,

Maurice M. Glazer, CEO

Glazer Financial Network