It’s always a challenging task to complete your federal tax return. But wading through this year’s version is even tougher than usual. Reason: A slew of new law changes and adjustments are reflected on Form 1040 for the first time. Here’s a roundup of the main twists and turns in store on 2008 returns.
• Wages, salaries and tips (Line 7): Excluded military benefits may include bonus payments made to an armed forces member (or his or her dependent) while in a combat zone. Payments made by the U.S. Department of Veterans Affairs (VA) under a work therapy program also are tax-exempt.
• Capital gains and losses (Line 13): A surviving spouse can qualify for the home-sale exclusion for a sale occurring within two years of the deceased spouse’s death as long as all the tax-law requirements are met and the surviving spouse hasn’t remarried. The two-out-of-five-year test may be suspended for up to 10 years for ...(register to read more)