www.aarp.org/taxaide

Serving Bullitt, Henry, Jefferson, Oldham, Shelby, and Spencer counties in Kentucky
  and Clark, Floyd, Harrison, Scott, and Washington counties in Southern Indiana.

Kentucky’s Standard Deduction, Pension Exclusionfor 2008 Tax Year

Kentucky’s standard deduction for individual income tax increases to $2,100 for the 2008 tax year as authorized by KRS 141.081(2). This change represents an increase from $2,050 for the 2007 tax year.

Taxpayers who do not itemize deductions on their individual income tax return are entitled to claim this standard deduction.

Kentucky’s individual income tax pension exclusion will remain unchanged at $41,110 for the 2008 tax year. This exclusion applies to tax returns due April 15, 2009.

Retirees who make quarterly estimated Kentucky individual income tax payments should take this pension exclusion into account when calculating their quarterly payments for 2009.

The first payment is due April 15, 2009. The 2005 General Assembly repealed KRS 141.0105, which previously provided for the pension exclusion to be adjusted annually for inflation.

From Kentucky Tax Alert, Sept 2008, Vol 27, No.5

MISSING SOMETHING??????

Planning ahead for your 2008 taxes, many taxpayers (and preparers too sometimes) neglect to include some easily overlooked options.

Rental Income of your home for periods of less than 15 days is not taxable – like maybe for the Ryder Cup or the Derby!

Sales Tax can be used as a deduction in lieu of state income tax when you itemize – expired at the end of 2007 but may be renewed for 2008. If is was significant in 2007 and was missed, you may want to consider an amended return for 2007.

Excess Social Security Withholding can apply, particularly for those with two or more jobs.

Phone Excise Tax can still be claimed if not claimed earlier although most claimed in 2006.

Federal Government Interest, like the interest on US Treasury notes, bills and bonds is typically exempt from state income tax.

Charitable Expenses that you spend while volunteering can often be used so be sure to keep detailed records of dates, mileage, special supplies and clothing unique to the services you provide.

The above are a few samples of items that may be missed. Check the IRS web site and manuals for complete details and limitations.

Mileage Rates Changed

Persons who itemize their deductions need to keep detailed records, canceled checks, and/or receipts for all related expenditures. The need for complete records applies to any item on Schedule A of both federal and state returns. Note too that cash gifts must be acknowledged in writing by non profit organizations.

Those who itemize mileage need to divide the calendar to reflect the two rates used for 2008. See the following table:

Purpose Jan-1 to Jun-30, 2008 Jul-1 to Dec-31, 2008 Business 50.5 cents per mile 58.5 cents per mile Medical/Moving 19 cents per mile 27 cents per mile Charitable 14 cents per mile 14 cents per mile

Advantages of E-Filing

It’s the fastest, easiest and most convenient way to file you income tax return.

Specific advantages include the following:

Refunds can be received in as little as 8 days using electronic direct deposits

Payments can be deferred until April 15

Receipt of the return is acknowledged by the IRS & KDOR

Mathematical error are virtually eliminated

When eligible, the PIN signature eliminates the need to file any paper

E-Filing is a FREE service of AARP Tax-Aide

Taxpayers receive a printed copy of their return for their records

Note: There are some limited circumstances that still require a traditional paper return to be filed.

Traditional Paper Returns

For those who prefer, traditional paper returns can be prepared by AARP Tax-Aide Counselors.

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