2004 Annual limits and rates for FICA tax, Social Security tax, maximum pension & 401K deductions contributions, reimbursed mileage rate, depreciation, self-employed heath, insurance deduction, gift tax and corporate tax rates. QuickBooks help and training for small business. QuickBooks help and training for small business.
 

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2004
 Tax Rates and Limits

 You landed on  our 2004 page
 Please click below to view our 2007 - 2008 limits page

 

2007/2008 Rates Click here


 

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FICA Tax (941 Tax) limit  - Fica Limit

Social Security tax includes FICA 6.2% and Medicare 1.45%. The FICA tax limit (Social Security) changes annually. The Medicare tax has no limit.  Employer FICA tax and Employee FICA have the same limits. Both FICA tax rate (6.2%)  and Medicare tax rate (1.45%) as a rule do not change. In addition to FICA tax limit and Social Security Limit, other tax limits and tax rate (s) can be found on this webpage.

2004 Social Security Wage Base limit
2005 Social security Wage Base limit-  NEW

2004 Medicare Wage Base limit         
2005 Medicare Wage Base limit    

 

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 $ 87,900 
 $ 90,000

Unlimited
Unlimited

FUTA Tax (940) limit

2004 Federal Unemployment limit

$   7,000

Shortcuts, tips, resources  for payroll taxes and human resources

QuickBooks Payroll

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2004 Mileage Rate

For deducting or reimbursing 2004 business mileage on a personally owned vehicle
2005 business mileage
2004 Mileage- Business rate
.375 cents per mile (2004)
.
405  cents per mile for 2005
2004 Mileage -Charity rate
.14 cents per mile  (2004)
.
15 cents per mile for 2005
2004 Milage -Medical and moving rate
.14 cents per mile   (2004)
.14 cents per mile for 2005 

 Payroll tax rules Part A  and Part B  for employees or owners using a company vehicle

2003 rates and limits - Social Security, Mileage, Pension, 401K, IRA

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2004 Maximum contributions and limits to pensions, IRA, and 401 K

2004 Maximum employee 401K contribution limit




2004 $13,000 +$3,000 (over age 50)
2005 $14,000 +$4,000 (over age 50)
2006 $15,000 +$5,000 (over age 50)

2004 Catch up contribution Limit  (over age 50)

 

$ 3,000  (included in above)
 

2004 Employer contribution to 401K is limited          

2004 total additions (employer contribution plus employee contribution) cannot exceed lesser of :
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Up to 25% of compensation

Under age 50:  
$41,000 or 100 % of compensation.
Age 50 +:
$44,000 or 100 % of compensation

2004 Maximum Annual Compensation limits  for determining benefits or contributions under  a qualified plan  (401(a)(17), 404(l), 408(k)(3)(C), & 408(k)(6)(D)

Note: for 2005 definition of a key employee in a top-heavy plan is
increased from $130,000 to
$135,000

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$  205,000   (2004)
$  210,000   (2005) 

2004 Maximum Annual Defined Contribution- Employer Contributions for 2004 to an employee SEP-IRA cannot exceed the lesser of  the following amounts:

2004 Simplified Employee Pension
Employers contribution for employees is  based on the  plan document, which cannot be more restrictive than including all employees who performed services for the employer in the last 3 of 5 years with earnings greater than:

Employees covered under collective bargaining employees & certain nonresident aliens may also be exclude.

Special rules apply to the self-employed. See publication 560 (www.irs.gov) for a worksheet on how to calculate a 2004 SEP contribution for a self employed Schedule C Filer.  For the 2003 worksheet, click here.

Learn more- The ABCs of SEP Plans
Checklist- are you in compliance with IRS SEP rules and regs? Pdf

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25% of the employee's W2 compensation (up to $205,000)
         or
$   41,000   (2004)
$   42,000   (2005) 

 

 

     $450 for 2004
     $450 for 2005

2004 Simple Retirement Account (Simple IRA)
Maximum Pretax Employee contribution
Learn more- The ABCs of Simple Plans
Checklist- are you in compliance with IRS Simple rules and regs? Pdf





$     9,000   + over age 50 catch up

         (2005 $10,000)
2004 Simple Catch up Deferral (over age 50)

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$    1,500
        (2005 $2,000)
        (2006 $2,500)

2004 Limit to  Traditional IRA, nondeductible IRA, or Roth IRA.     Who can contribute





$    3,000 + over age 50 catch up
        (2005 $4,000)

IRA Catch up Deferral (over age 50)

$      500

Learn about small business pensions

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2004 Maximum Earnings for Retirees

2004 Maximum retirement earnings before Social Security benefits are reduced
(One dollar in benefits will be withheld for every $2 in earnings above the limit).
 

over age 65


2004 under age 65 reduction begins
2005 under age 65 reduction begins

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unlimited earnings permitted - no reduction

earnings over $ 11,640 ($970 / mo)
earnings over $12,000 ($1000/ mo)
In the year the individual reaches full retirement age, earnings  months prior to attaining full retirement age - One dollar in benefits will be withheld for every $3 in earnings above the limit of $31,080 (2004)


Minimum Wage hourly rates

Link to a chart of all States Minimum Wage rates
Federal minimum wage 

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2004 Corporation and Individual Tax Rates

Individual Rates  download publication 505 for orig source
  • $4,850 2004 Standard deduction for  Single

  • $4,850 2004 Standard deduction for Married filing separately

  • $7,150 2004 Standard deduction for Head of household

  • $9,700 2004 Standard deduction for Married filing Joint

  •     800 2004 Taxpayer claimed as a dependent

Exemption amount $3,100
Deduction for personal exemption phase out begins
Single $142,700-$265,200
Married $214,050-$336,550
HOH $178,350-$300,850

Deduction for itemized deductions phase out begins when
AGI Threshold
Married, Single, HOH   $142,700
Married Filing Separate    $71,350

2004 Individual Tax  Rates 10% 15% 25% 28% 33% 35%

Single

7,150
 
next 21,900
to 29,050
next
41,300
 to 70,350
next
76,400
to 146,750
next
172,350
to 319,100
amounts over
 319,100

Head Of Household

10,200
 

next 28,700
to 38,900
next
61,600
 to 100,500
next
62,200
to 162,700
next
156,400
to 319,100
amounts over
 319,100

Married Joint

14,300
 

next 43,800
to 58,100
 
next
59,150
 to 117,250
next
61,400
to 178,650
next
140,450
to 319,100
amounts over
 319,100

Click here to download IRS Publication 505 containing these rates

For tax forms and extensions to file individual tax returns click here

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Click here for:  2004 Corporate Rates
 

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When tax breaks expire
2004 Deduction for educator expenses-  deduction has been extended for 2004
2005 Child care credit reduce to $700 from $1000
2005 Married couple standard deduction reverts from twice that of single to 174% of single
2005 10% bracket is reduced
 
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2004 Gift Tax

 
2004 Federal gift tax exclusion
 

2004 Estate Tax Applicable Exclusion Amount

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$    11,000


$1,500,000

 

 


Self Employed Health Insurance Deduction

 
Deductible Percentage for 2004 health insurance premiums    100%
   (2002=70% 2003=100%)

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Health Savings Accounts (HSA)

 
High Deductible Health Plan and Contribution Limits
   Maximum Annual Deductible Annual out-of- pocket does not exceed
2004 Self -only coverage annual deductible $1,000-$2,600 $5,000
2004 Family coverage annual deductible $2,000-$5,150 $10,000
 
Learn more about Health Savings Accounts and administrative requirements  

 
Depreciation

2004 Section 179 depreciation $102,000 see more
The amount of investment qualifying for this immediate deduction begins to phase out for small businesses with investment in excess of $410,000

Regs(2003) now permit Section 179 on off-the-shelf software

Leasehold property placed in service before 1/1/2006 - 15 year SL
(subsequent owners of the leasehold property required to depreciate over 39 Years)

Elect to deduct $5000 start-up & $5000 organizational expenses in the year the business begins.
Effective for expenses incurred after 10/22/04. Be sure to read more on the details of this rule.
Deductions reduced by the amount of which the cumulative cost of start-up or organizational expenditures exceed $50,000 respectively

2004 Luxury Auto depreciation rules:    
A car is defined as a four-wheel passenger automobile designed for use on public roads and is rated at 6,000 pounds or less unloaded gross vehicle weight 1st year depreciation limit $2,960 including any Sec 179 deduction Plus:
for new vehicles bought in  2004 - additional 50% 1st-year bonus depreciation. The first-year depreciation amount for passenger automobiles, light trucks, and vans increases by $7,650. 
Total 1st year $10610
 
Special use vehicles (over 6000lbs loaded) now exempt from luxury auto rules and can be deducted under section 179 SUVs (over 6000lbs)
 

Heavy Trucks & Vans

 read more

$25,000 including any sec 179 deduction




$102,000 including any sec 179 deduction

Publication 946 has a nice table for limits on depreciation of vehicles placed in service in 2003 and earlier

The 50% and 30% bonus depreciation options expire December 31, 2004.

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Statute of Limitations

3 years from tax period due date or 3 years from date original return received whichever is later
unless the taxpayer fails to include on a return any information with respect to a listed transaction
then the statute of limitations will not expire before 1 year after the Secretary is furnished with the information.
See more Statute of Limitations guidelines
 

2003 rates and limits -
Social Security, Mileage, Pension, 401K, IRA
 

 

 

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