As usual, there were a number of changes for the tax year. As you ready your paperwork for yourself or your accountant, you may want to bear in mind the following changes for 2007.
The IRS briefly highlights these initial key changes:

* Self-employment tax - The maximum amount of self-employment income subject to Social Security taxes increases to $97,500 in 2007, up from $94,200 in 2006. The self-employment tax rate remains 15.3% on earnings to the Social Security maximum and 2.9% after the maximum.

* Social Security tax - The maximum amount of wages subject to Social Security tax increases to $97,500 in 2007, up from $94,200 in 2006. The tax rate remains 7.65% on employers and employees.

* Business standard mileage rate - The standard business mileage rate increases to 48.5 cents per mile for miles driven in 2007 for business, up from 44.5 cents per mile in 2006. (You can deduct the cost of parking and tolls in addition to the mileage allowance.)

* Per Diem (Based on number of overnights from logbooks - no receipts needed) 2007 rate is $52 per day at 75%

* Section 179 Expense Deduction - The maximum amount of qualifying property placed in service in 2007 that businesses can expense increases to $125,000, a $17,000 up from 2006. The annual investment limit increases to $500,000 for 2007, up from $430,000 the year before.

* Hybrid cars - The IRS site notes that the Energy Policy Act of 2005 replaced the clean-fuel burning deduction with a tax credit. A tax credit is subtracted directly from the total amount of federal tax owed. The tax credit for hybrid vehicles applies to vehicles purchased or placed in service on or after January 1, 2006. To learn more about which autos qualify and the tax credit associated with each, see the IRS’s “Hybrid Cars and Alternative Motor Vehicles.”

* Help with health care - Inc. magazine’s ‘New Tax Breaks for 2007” article outlines the way in which the Tax Relief and Health Care Act of 2006 made it easier to help employees cover medical coverage through Health Savings Accounts (HSAs). If you pay for a high-deductible (low-cost) health plan, tax-deductible contributions can be made to HSAs to pay medical costs not covered by insurance. Income earned in these accounts then builds up on a tax-deferred basis. Withdrawals to pay medical costs not covered by insurance are tax-free, but unused funds can be withdrawn at any time for any purpose; they are taxed and there is a 10% penalty for withdrawals for non-medical purposes before age 65. For 2007, the annual deduction is up to $2,850 for self-only coverage, or $5,650 for family coverage. The contribution is no longer limited to the policy’s deductible and the contribution need not be pro-rated for those who become eligible for HSAs during the year. Under the new legislation, employees can fund HSAs through a one-time transfer from an IRA, a flexible-spending account or a health reimbursement account; no deduction can be claimed for these funding options.

See Attachment http://drive18wheeler.com/site_media/uploads/tu2007.doc