New this year:

2007 Federal return:

Most of the changes from 2006 were inflationary adjustments:
Congress increased standard deduction by $200 for single taxpayers and by $400 for married taxpayers, increased personal exemption by $100, expanded income limits on IRA deduction and EIC credits and increased the phase-out limits of Social Security tax from $94.2K to $97.5K.

On the business side, standard mileage rates were increased to 48.5 cents and Section 179 deduction (amount of equipment placed in service which can be expensed right away) increased to $125K.

Perhaps the two most significant changes were the inclusion of mortgage insurance premium (PMI) originated after 2006 to the list of itemized deductions and new rules for record keeping of cash contributions to charity. Prior requirements were more lenient towards record keeping of small donations.

In 2007, the only contributions you will be able to deduct should be supported by a written record. Records could be in the form of a returned check or receipt or in the form of a written confirmation from a charity or a church with the name of the charity, date and the amount of contribution.

If you did not take small telephone excise credit last year, you still have an opportunity to claim it on the 2007 return.