TurboTax Deluxe Federal + State + eFile 2008

TurboTax Deluxe Federal + State + eFile 2008

1. A Whale of a Deal
Alaskan whaling captains can take a $10,000 deduction for the money they spend fixing their boats, buying equipment or on other whaling expenses, thanks to a small provision in the American Jobs Creation Act of 2004, inserted by then-Sen. Ted Stevens of Alaska. Since the only real whalers left in the U.S. are Native Americans preserving their cultural heritage, the deduction doesn’t aim to benefit businesses as much as it does community groups. Stevens’s support for whalers didn’t go unnoticed. The Alaska Eskimo Whaling Commission supported Stevens as he fended off corruption charges and throughout his last unsuccessful election.

2. Parents of Kidnapped Children
Back in 2000, the Internal Revenue Service issued a ruling that members of Congress called “cruel, heartless and anti-family.” It said that parents of a child that had been kidnapped could only claim the child as a dependent for the year in which the child had been kidnapped, not for later years. Congress threatened to write a law to remedy the situation, but the IRS quickly revised its ruling. Now parents whose child has been kidnapped can continue to take all credits and exclusions for which they would be eligible if the child still lived with them, until the child would be 18 years old or is found dead. The one caveat: the child must have been abducted by a stranger and not a family member.

3. International High Rollers
Foreigners nationals who don’t live in the U.S. but like to place wagers here can really win big. Any money they win on horse or dog races in the United States is exempt from U.S. taxes. That means they don’t have to cough up the 30 percent withholding tax that unlucky Americans must pay. This provision was also included in the 2004 jobs act, at the behest of Kentucky Sens. Jim Bunning and Mitch McConnell to help ease the suffering of bet-taking race courses. This break on legal gambling doesn’t have anything to do with taxes you are supposed to pay on illegal activity. That’s right. Anyone who receives bribes, deals drugs, takes kickbacks or steals property is expressly required to pay taxes on that income, reminds Luscome. Of course, they can write off their attorney’s fees as a business expense.

4. Clarinets and Other Medical Necessities
Way back in 1962, the IRS approved a write-off that was so out there, it’s still a favorite of tax lawyers. The agency allowed parents to deduct their children’s clarinet and music lessons. The reason? Orthodontists argued that it would help with kids’ overbites. Since then doctors’ notes have become gold to aggressive, inventive tax filers. They’ve successfully used the IRS’s sweepingly liberal interpretations of medical expenses to deduct money spent for air conditioners, swimming pools, hot tubs, Indian medicine-man consultations, sex therapy, diet dinners and home remodeling.

5. Let the Music Play
When writers or artists sell their copyrighted work, they have to pay income tax on the profits—unless they are selling their catalog of songs. Then they can say they are selling a capital asset (like a piece of equipment or a share of stock) and pay taxes on it at the capital-gains rate (which maxes out at 15 percent) instead of the much higher income-tax rate, which tops out at 35 percent. The provision was tucked into 2006 legislation after five hard years of lobbying by the Nashville Songwriters Association International, which argued that it was only leveling the playing field. Music publishers were already getting that break; it seemed only fair to include the songwriters, too.

6. Makers of Fishing-Tackle Boxes
Bless that 2004 jobs creation bill. We know that makers of fishing-tackle boxes (like the Plano Molding Co. of Illinois) certainly do. Before that bill was enacted, they had to pay a 10 percent excise tax on their boxes. Secure sport fishermen were instead stowing their flies in less-expensive plastic sewing boxes. But Rep. Jerry Weller, a Republican from Illinois, got the rate cut to 3 percent, saving the industry as much as $11 million over five years, one tackle box at a time.
© 2009 source.

Early Filers Pile on Errors

To err is human — especially this year.

As if doing your tax return wasn’t tricky enough, it’s particularly easy to make mistakes this year, thanks in large part to the economic-stimulus payments sent out in 2008 to nearly 120 million filers. An early sampling of tax returns received by the Internal Revenue Service this year shows about 15% made mistakes involving what’s known as a “recovery rebate credit.” source.

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