2005 Tax Numbers
What’s New in Taxes
New tax numbers are released for 2005
The IRS adjusts many tax numbers for inflation each year. Other numbers change as a result of tax law revision. As you begin your tax planning for 2005, here are some of the changes you’ll need to take into account.
||The maximum earnings subject to social security tax increases to $90,000 for 2005. As before, all earned income (wages and self-employment income) is subject to Medicare tax. The earnings limit for retirees under age 65 increases to $12,000. There is no earnings limit for those 65 and older.|
||The top estate tax rate decreases to 47%, but the exemption amount stays at $1.5 million for 2005. The annual gift tax exclusion remains at $11,000 per donee.|
||The nanny tax threshold remains at $1,400 for 2005. If you pay household workers more than this amount during the year, you’re responsible for payroll taxes.|
||The kiddie tax threshold remains at $1,600. If your child under age 14 has more than $1,600 of unearned income in 2005 (e.g., dividends and interest income), the excess will be taxed at your highest rate.|
||The first-year business equipment expensing limit increases to $105,000. A new limit applies to sport utility vehicles: when purchased for business use, no more than $25,000 may be expensed in the first year.|
||The standard mileage rate for business driving increases to 40.5¢ per mile, and the mileage rate for medical and moving expenses increases to 15¢ a mile. The rate for charitable driving remains at 14¢ a mile.|
For details or for assistance with your tax planning, give our office a call.