Tax Tips - 2003

QUICK REFERENCE

Auto depreciation (max.)		Social Security earnings limit
1st year *2nd year* *3rd year* *thereafter*	$ 3,060 $ 4,800 $ 2,850 $ 1,775	under age 65 + 8 months age 65 or older + 8 months or older	$ 12,480 no limit
Personal exemption:	$ 3,300	Federal per-diem travel rates
Standard mileage rates:		high-cost area *meals (hi*gh-cost area) *low-cost area* *meals (low-co*st area)	$ 246 $ 58 $ 148 $ 45
business use medical or moving charitable (Katrina-Related)	$0.445 $0.180 $0.140 $0.320		$ 246 $ 58 $ 148 $ 45
Phaseout of personal exemption starts with income at:		Automatic Exemption from Estate Tax	$ 2,000,000
couple (AGI)	$ 225,750	Wage base: Social Security tax	$ 94,200
single (AGI)	$ 150,500	Taxable wage base: Medicare	no limit
Phaseout of itemized deduction starts: Itemized deduction phaseout decreases to 2% of AGI, (was 3% of AGI in prior years).	$ 150,500	SEP's cover employees who earn	$ 450
	$ 150,500	2006 contribution limits: IRA's additional catch-up amount 401(k)s, 403(b)s, +457's additional catch-up amount SIMPLEs additional catch-up amount	$ 4,000 $ 1,000 $ 15,000 $ 5,000 $ 10,000 $ 2,500

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
child's investment income up to $850
federal income-tax refunds

2006 INCOME TAX RATES

	Taxable Income	Tax Rate (%)	Total Tax at Breakpoint	Phase-out Range of Personal Exemptions
Married, Filing Jointly	0 - 15,100 15,101 - 61,300 61,301 - 123,700 123,701 - 188,450 188,451 - 336,550 336,551 and up	10 15 25 28 33 35	1,510.00 8,440.00 24,040.00 42,170.00 91,043.00	$ 225,750 - 348,250
Head of Household	0 - 10,750 10,751 - 41,050 41,051 - 106,000 106,001 - 171,650 171,651 - 336,550 336,551 and up	10 15 25 28 33 35	1,075.00 5,620.00 21,857.50 40,239.50 94,656.50	$ 188,150 - 310,650
Single	0 - 7,550 7,551 - 30,650 30,651 - 74,200 74,201 - 154,800 154,801 - 336,550 336,551 and up	10 15 25 28 33 35	755.00 4,220.00 15,107.50 37,675.50 97,653.00	$ 150,500 - 273,000
Married, Filing Separately	0 - 7,550 7,551 - 30,650 30,651 - 61,850 61,851 - 94,225 94,226 - 168,275 168,276 and up	10 15 25 28 33 35	755.00 4,220.00 12,020.00 21,085.00 45,521.50	$ 112,875 - 174,125
Estates & Trusts	0 - 2,050 2,051 - 4,850 4,851 - 7,400 7,401 - 10,050 10,051 and up	15 25 28 33 35	307.50 1,007.50 1,721.50 2,596.00	The reduction of personal exemptions of high earners is cut by 1/3 this year. Even the highest earners gets a $1,100 exemption.

2006 STANDARD DEDUCTION
	Under Age 65		Age 65 or Over
Married, Filing Jointly	$	10,300	11,300 (one spouse 65 or older) 12,300 (both spouses 65 or older)	Standard deduction for an individual claimed as a dependent by another cannot exceed the greater of $850 or the dependent's earned income + $300, up to the normal standard deduction. If one spouse filing separately itemizes, the other gets no standard deduction.
Head of Household	$	7,550	8,800
Unmarried Individuals	$	5,150	6,450
Married, Filing Separately	$	5,150	6,150
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 $38,348 (For singles with no qualifying child about $12,120) may qualify.

Child and Dependent Care		For care for your child under age 13 or disabled dependent while you work: 20% - 35% (tied to AGI) 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.