| Tax
Credits, Rates, Deductions, Exemptions, Etc.
New Tax Acts for 2004
The IRS was busy toward the
end of year with the passage of two new tax acts.
1 - The Working Families
Tax Relief Act of 2004 (10/4/2004)
2 - The American Job Creation Act of 2004 (10/22/04)
The following are some of the highlights of these
two tax acts:
Personal and
Dependent Exemptions
For the tax year beginning
in 2004, the personal or dependent exemption amount is $3,100. In 2005,
it increases to $3,200.
Standard Deductions
Married filing joint -
$9,700
Head of household - $7,150
Single - $4,850
Married filing separate - $4,850
Individual Tax Rate
Single:
$0 -
7,150
10%
$7,151 - 29,050 15%
$29,051 - 70,350 25%
$70,351 - 146,750 28%
$146,751 - 319,100 33%
over $319,100 35%
Married filing joint:
$0 -
14,300
10%
$14,301 - 58,100 15%
$58,101 - 117,250 25%
$117,251 - 178,650 28%
$178,651 - 319,100 33%
over $319,100 35%
Section
179 Business Expensing Election
This is a wonderful tax
deduction for businesses to deduct most of capital investments (fixed asset
properties such as computers, equipment, etc.) to write-off during the first
year of purchase, instead of expensing them over the life of an asset, up to
$102,000 in 2004.
Largest Standard
Mileage Rate Increase
Beginning January 1, 2005,
the standard mileage rates used in computing the deductible costs of operating
an automobile will be:
2004 2005
Business mileage .37 1/2
.40 1/2
Medical mileage
.14 .15
Moving mileage
.14 .15
Charitable mileage
.14 .15
Child Credit
The
credit which scheduled to decrease to $700 per child for 2005 will stay at the
same amount of $1,000 until 2010.
Self-Employed Heath
Insurance
You are allowed to deduct
100% of your health insurance and qualified long-term care insurance for you
and your family if you are self-employed during 2004.
10% Rate Bracket
The scheduled reduction in
the amount of income subject to the 10% tax bracket has been extended through
2010.
Marriage Penalty
Relief
The standard deduction for
single taxpayers is doubled for married couples filing jointly.
Alternative Minimum
Tax
The increased AMT exemption
amounts are $29,000 for married filing separately, $40,250 for single and head
of household, and $58,000 for married filing jointly.
Extension of Expiring
Business Tax Provisions
The new tax law extends 22
expiring tax provisions including the research tax credit, which provides a
credit equal to 20% of qualified research expenses exceeding a base amount,
and the work opportunity tax credit, which available to businesses hiring
unemployed individuals from certain targeted groups.
Computer Software
Eligible for Section 179
Off-the-shelf computer
software will be considered qualifying property for purposes of the election
to expense under Section 179.
Deduction for Sales
Taxes
Taxpayers who itemize
deductions will now have a choice of deducting their state and local income
taxes or their state and local sales taxes. This provision will help
those taxpayers in states that have no personal income tax.
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