Boat U.S. - January 2008 - (Page 6) BoatU.S.reports Boat Tax Deductions Remain for ’07 While the U.S. Congress continues to debate a variety of tax relief measures, at least two deductions of interest to boat owners remain in place for the 2007 tax year: mortgage interest deductions and state sales tax deductions. Boaters who made a large purchase last year may want to consider taking the state sales tax deduction. If your sales tax is more than your state income tax it could result in lower taxes. You must choose one; you can’t deduct both. Additionally, you can only take the sales tax deduction if the tax rate applied to a boat purchase is the same as the state’s general sales tax. In order to use this deduction, tax returns must be itemized. On Schedule A, state sales taxes go on Line 5b. Some members have been told the deduction is gone, but when it was extended in late 2006, Congress extended it for two years, through 2008. It will disappear for 2008 tax returns, unless Congress votes again to extend it. Many more boaters will benefit from deducting the interest paid on their boat loans if the loan is secured and the boat meets the definition of a “second home” — meaning it has a galley, a head and sleeping berth. Keep in mind that even if your vessel qualifies for this deduction, you may or may not receive a Form 1098 from your lending institution reporting interest paid. Not receiving the form does not preclude taking the deduction. On Schedule A, you enter the amount on Line 10 if you received a 1098, or enter the amount on Line 11 if not and include the lender’s tax ID number or SSN. For those who fall under the Alternative Minimum Tax (AMT), most of the deductions do not count, as taxes are calculated entirely differently. Hopefully Congress will have voted by now to raise the threshold for AMT, which was intended to tax the very rich but is coming close to encompassing many millions more middleclass citizens. For more details on the state tax deductions, go to irs.gov and download Publication 600. For mortgage deductions, download Publication 936, or Fact Sheets. As always, it’s best to go over your own tax situation with a qualified tax preparer. Boating Support Needed for Discharge Legislation Since last summer, BoatU.S. has been working with other boating groups on federal legislation that will give recreational boats a continued exemption from Clean Water Act permits. These looming permits are the result of a fall 2006 U.S. District Court decision. While the original court case was focused on oceangoing commercial ships, their ballast water and the importation of aquatic nuisance species, the court decision was much more broad, encompassing all discharges from all vessels. Army Corps Floats Life Jacket Rule The millions of visitors to lakes and reservoirs managed by the Army Corps of Engineers may have to wear life jackets to go boating, if the agency’s chief has his way. The Corps, which has jurisdiction over 456 waterways in 43 states, is currently contemplating mandatory life jacket wear for all boaters on their waters. Major General Don Riley, Director of the Corps’ Civil Works, is concerned that despite several decades of safety education aimed at swimmers and boaters, the water-related fatality rate at Corps facilities has not improved in the last few years. Nationwide, the Corps has a 10-year average of 164 water-related fatalities a year. The majority of these deaths occur among swimmers outside designated swim areas, as well as from falls off docks, banks and land. Boating-specific deaths are approximately 42% of the annual water-related fatalities. This boating category includes 6 BoatU.S. Magazine January 2008 deaths attributed to swimming from a boat, falling or fishing from the boat, nighttime capsizing, and capsizing in general. At press time in late November, Corps staff was conducting research into existing state laws, enforcement capabilities and the effectiveness of education and outreach efforts. If the Corps decides to create a federal life jacket standard for its waters, the proposed change in Title 36 of the federal regulations would require a public comment period. However, if an individual district commander, leading one of the 38 districts of the Corps, decides to implement a life jacket requirement for all boaters in their own geographic district, they can enact this change merely by signing a statement to that effect. BoatU.S. is part of the ongoing discussions with the Corps; if a comment period is announced, BoatU.S. will post the notice at BoatUS.com/gov. Transatlantic commercial ships entering the Great Lakes are believed to have transferred invasive species such as the zebra mussel in ballast water. The Environmental Protection Agency is now required to develop a discharge permit system for all vessels — ships and boats — in the U.S. by Sept. 30, 2008. These permits would potentially cover deck wash, engine cooling water, bilge water and gray water. In May, The Recreational Boating Act of 2007 (H.R. 2550) was introduced in the U.S. House of Representatives, and now has more than 45 co-sponsors. In the fall, S. 2067, which mirrors H.R. 2550, was introduced by Sen. Mel Martinez (R-FL). Both Sen. Bill Nelson (D-FL) and Sen. Barbara Boxer (D-CA) have said that recreational boats should not have to get permits. While the legislation is an important first step, with a permit deadline looming in nine months, more co-sponsors from both parties are needed. BoatU.S. members are urged to phone their representatives and senators and ask them to support H.R. 2550 and S. 2067, and tell them how important these bills are for the future of boating. For more details, visit www.BoatUS.com/gov/fed-alert.asp. BoatU.S. Government Affairs sent out an e-mail Alert in November to BoatU.S. members asking them to contact Congress. If you did not receive this e-mail Alert, BoatU.S. may not have your e-mail address. If you’d like to receive these alerts, send your current e-mail information to membership@BoatUS.com. Photo courtesy of Holland Area Convention & Visitor Bureau. http://www.irs.gov http://www.BoatUS.com/gov/fed-alert.asp http://www.BoatUS.com/gov
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