Any economic stimulus payment you received is not taxable for federal income tax purposes but reduces your recovery rebate credit.

This credit is figured like last year's economic stimulus payment, except that the amounts are based on tax year 2008 instead of tax year 2007. The maximum credit is $600 ($1,200 if married filing jointly) plus $300 for each qualifying child. See the instructions for line 42 on page 53.

If your economic stimulus payment was directly deposited to a tax-favored account, and you withdraw the payment by the due date of your return (including extensions), the amount withdrawn will not be taxed and no additional tax or penalty will apply. For a Coverdell education savings account, the withdrawal can be made by the later of the above date or June 1, 2009. See the instructions for lines 11a and 11b that begin on page 24.

The AMT exemption amount is increased to $46,200 ($69,950 if married filing jointly or a qualifying widow(er); $34,975 if married filing separately).

You and your spouse, if filing jointly, each may be able to deduct up to $5,000 ($6,000 if age 50 or older at the end of the year). You may be able to take an IRA deduction if you were covered by a retirement plan and your 2008 modified adjusted gross income (AGI) is less than $63,000 ($105,000 if married filing jointly or qualifying widow(er)). If your spouse was covered by a retirement plan, but you were not, you may be able to take an IRA deduction if your 2008 modified AGI is less than $169,000. See the instructions for line 17 that begin on page 29 for details and exceptions.

Your standard deduction is increased by certain state or local real estate taxes you paid. See the instructions for line 23c on page 32.

You can rollover distributions from an eligible retirement plan to a Roth IRA. The rollover is not tax-free. See the instructions for lines 11a and 11b that begin on page 24 for details.

You may be able to take the EIC if:

• A child lived with you and you earned less than $38,646 ($41,646 if married filing jointly), or
• A child did not live with you and you earned less than $12,880 ($15,880 if married filing jointly).

The maximum AGI you can have and still get the credit also has increased. You may be able to take the credit if your AGI is less than the amount in the above list that applies to you. The maximum investment income you can have and still get the credit has increased to $2,950. See the instructions for lines 40a and 40b that begin on page 40.

You may be mailing your return to a different address this year because the IRS has changed the filing location for several areas. If you received an envelope with your tax package, please use it. Otherwise, see Where Do You File? on the back cover.

Taxpayers with adjusted gross income above a certain amount may lose part of their deduction for personal exemptions. The amount by which this deduction is reduced in 2008 is only of the amount of the reduction that otherwise would have applied in 2007.

The 5% tax rate on qualified dividends and capital gain distributions is reduced to zero.

Form 8615 is required to figure the tax for a child with investment income of more than $1,800 if the child:

1. Was under age 18 at the end of 2008,
2. Was age 18 at the end of 2008 and did not have earned income that was more than half of the child's support, or
3. Was a full-time student over age 18 and under age 24 at the end of 2008 and did not have earned income that was more than half of the child's support.

The election to report a child's investment income on a parent's return and the special rule for when a child must file Form 6251 also now apply to the children listed above.

Temporary tax relief was enacted as a result of May 4, 2007, storms and tornadoes affecting the Kansas disaster area. The tax benefits provided by this relief include special rules for withdrawals and loans from IRAs and other qualified retirement plans. For more details on these and other tax benefits related to the Kansas disaster area, see Pub. 4492-A.

Temporary tax relief was enacted as a result of severe storms, tornadoes, or flooding affecting Midwestern disaster areas after May 19, 2008, and before August 1, 2008. The tax benefits provided by this relief include the following.

• An additional exemption amount if you provided housing for a person displaced by the Midwestern storms, tornadoes, or flooding.
• An election to use your 2007 earned income to figure your 2008 EIC and additional child tax credit.
• Special rules for time and support tests for people who were temporarily relocated because of the Midwestern storms, tornadoes, or flooding.
• Special rules for withdrawals and loans from IRAs and other qualified retirement plans.

For more details on these and other tax benefits related to the Midwestern disaster areas, see Pub. 4492-B.