Tax Tips - 2003

QUICK REFERENCE

Auto depreciation (max.)		Social Security earnings limit
1st year *2nd year* *3rd year* *thereafter*	$ 2,960 $ 4,700 $ 2,850 $ 1,675	under age 65 + 6 months age 65 or older + 6 months or older	$ 12,000 no limit
Personal exemption:	$ 3,200	Federal per-diem travel rates
Standard mileage rates:		high-cost area *meals (hi*gh-cost area) *low-cost area* *meals (low-co*st area)	$ 204 $ 46 $ 125 $ 36
cars used in business before 9/1/2005 9/1/2005 and after cars used for charity cars used for moving or medical transport before 9/1/2005 9/1/2005 and after	$0.405 $0.485 $0.140 $0.150 $0.220		$ 204 $ 46 $ 125 $ 36
Phaseout of personal exemption starts with income at:		Automatic Exemption from Estate Tax	$ 1,500,000
couple (AGI)	$ 218,950	Wage base: Social Security tax	$ 90,000
single (AGI)	$ 145,950	Taxable wage base: Medicare	no limit
Phaseout of itemized deduction starts:	$ 145,950	SEP's cover employees who earn	$ 450
Phaseout of itemized deduction starts:	$ 145,950	2005 deferral limits-401(K), SEPs:	$ 14,000

INCLUDED IN INCOME
wages salary fees tips commissions business profits gain on sale of real estate, securities, and other property interest received rents collected dividends royalties alimony and separate- maintenance payments	sick pay annuities and pensions, to the extent the return exceeds investment income from an interest in an estate or trust prizes and awards some fringe benefits up to 85% of social security benefits gambling winnings net of losses strike benefits unemployment compensation hobby income barter income illegal income

NOT INCLUDED IN INCOME

gifts and inheritances
interest from certain state and municipal bonds (or received by mutual funds that hold them)
employer reimbursements for business expenses (that you don't deduct)
returns of capital gain up to $500,000 on sale of primary residence (under certain conditions)
some or all of Social Security benefits
employer-paid health coverage for immediate family
compensation for sickness or injury
child support

welfare
accident-and health-insurance proceeds
life-insurance proceeds (estate tax may apply)
veterans benefits
scholarships and fellowships to a degree candidate if used for certain purposes
14 days' rental income from house or vacation home
interest on Education Savings Bonds
dependent-child wages up to $3,000
child's investment income up to $750
federal income-tax refunds

2005 INCOME TAX RATES

	Taxable Income	Tax Rate (%)	Total Tax at Breakpoint	Phase-out Range of Personal Exemptions
Married, Filing Jointly	0 - 14,600 14,601 - 59,400 59,401 - 119,950 119,951 - 182,800 182,801 - 326,450 326,451 and up	10 15 25 28 33 35	1,460.00 8,180.00 23,317.50 40,915.50 88,328.00	$ 218,950 - 341,450
Head of Household	0 - 10,450 10,451 - 39,800 39,801 - 102,800 102,801 - 166,450 166,451 - 326,450 326,451 and up	10 15 25 28 33 35	1,045.00 5,447.50 21,197.50 39,019.50 88,320.00	$ 182,450 - 304,950
Single	0 - 7,300 7,301 - 29,700 29,701 - 71,950 71,951 - 150,150 150,151 - 326,450 326,451 and up	10 15 25 28 33 35	730.00 4,090.00 14,652.50 36,548.50 94,727.50	$ 145,950 - 268,450
Married, Filing Separately	0 - 7,300 7,301 - 29,700 29,701 - 59,975 59,976 - 91,400 91,401 - 163,225 163,226 and up	10 15 25 28 33 35	730.00 4,090.00 11,658.75 20,457.75 44,160.00	$ 109,475 - 170,725
Estates & Trusts	0 - 2,000 2,001 - 4,700 4,701 - 7,150 7,151 - 9,750 9,751 and up	15 25 28 33 35	300.00 975.00 1,661.00 2,519.00

2005 STANDARD DEDUCTION
	Under Age 65		Age 65 or Over
Married, Filing Jointly	$	10,000	11,000 (one spouse 65 or older) 12,000 (both spouses 65 or older)	Standard deduction for an individual claimed as a dependent by another cannot exceed the greater of $800 or the dependent's earned income + $250, up to the normal standard deduction. If one spouse filing separately itemizes, the other gets no standard deduction.
Head of Household	$	7,300	8,550
Unmarried Individuals	$	5,000	6,250
Married, Filing Separately	$	5,000	6,250
Blind taxpayers get an extra $1000 if married, $1,250 if single.
CREDITS

Earned-Income Credit		The credit is "refundable" - even someone who owes no taxes can claim a "refund". It helps low-income workers age 25 and above, by offsetting the impact of payroll taxes. Couples with total earned income of $37,263 (For singles with no qualifying child about $11,750) may qualify. This year the EIC adopts the uniform definition of a qualifying child.

Child and Dependent Care		For care for your child under age 13 or disabled dependent while you work: 35% of up to $3,000 for one child or up to $6,000 for more than one. Phaseout of the credit starts at $15,000 of AGI, maximum credit is $2,100.

Elderly Disabled		Credit is 15% of qualifying income; available to permanently disabled age 65 and over.