Taxes: What’s New for 2007

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Your current year taxes are filed, and you’re breathing a sigh of relief. But before you relax, take a minute to check out changes that might save you money on next year’s return.

Here’s an overview of four new or updated tax provisions.

Increased IRA deduction limits. Your deduction for contributions to a traditional IRA is limited when you’re an active participant in your employer’s plan and your adjusted gross income (AGI) exceeds a specified amount. For 2007, the AGI limit increases to $103,000 if you’re married filing jointly or a qualifying widow or widower ($62,000 for singles).

Higher standard mileage rates. For 2007, you can claim 48.5 cents a mile for business activities. The rate is 20 cents a mile if you use your car for medical reasons or a deductible move.

Note: Charitable mileage remains at 14 cents.

New way to fund a health savings account (HSA). In 2007, you can fund an HSA with money from your IRA. The maximum contribution is $2,850 for single coverage and $5,650 for family coverage.

New itemized deduction. If you take out a mortgage in 2007, you may be able to deduct some of the mortgage insurance premiums you pay during the year. Your AGI must be less than $110,000 if you’re married and filing jointly ($55,000 for married filing separately).

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