New Changes in Tax Laws Can Save, Cost Money

This year you could pay more money to Uncle Same because of changes in the tax laws on charitable giving and the Kiddie Tax. On the other hand, you could save money on your federal income tax because of a new telephone long-distance phone service tax credit and a change in the Alternative Minimum Tax.

Those are some of the changes in the tax laws that could cost you money in some cases, save you money in others, this year.

This year there are stricter rules on charitable giving that could alter how you tally the value of clothing and household items you donate to charity. It also might be a good idea to have proof of the money you give to your local church.

Items donated to local charities, such as clothing or furniture, must be in good used condition or better to be deductible. According to Goodwill, that means "saleable, working condition."

The IRS also might frown on your claiming more than 10% of the original cost of an item as a deduction. It might frown if you gave an item of clothing that originally cost $25, if you claim $5.

Another change in the tax law that could affect you is that documentation requirements for monetary donations to charities are tougher. Cash recommendations had been recommended in the past, but are required in 2007. It would be a good idea to save receipts from your charitable contributions for your giving tax return next year.

Another change in the tax laws that could cost you money is a change in the Kiddie Tax. The new law requires that children under 18 who receive taxable income of more than $1,700 to be taxed at the rate of his parents. Previously, the tax applied only to children under 14 with taxable investment income of more than $1,600.

In addition, if a teenager works and pays taxes, he or she will have to have his parents declare their tax rate. That is to determine the rates the teens' taxes should be taxed at, based on the new law.