2005 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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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.

2005 Social security Wage Base limit 

2005 Medicare Wage Base limit         



2006 Social security Wage Base limit    

 

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 $ 90,000

Unlimited



$ 94,200

FUTA Tax (940) limit

2005 Federal Unemployment limit

$   7,000

Shortcuts, tips, resources  for payroll taxes and human resources

QuickBooks Payroll

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2005 Mileage Rate

For deducting or reimbursing 2005 business mileage on a personally owned vehicle
New 4 Month End of Year Rates
2005 Mileage- Business rate
From Sept 1 - Dec 31 2005 Business Rate
.405 cents per mile (2005)
.485 cents per mile (2005)
2005 Mileage -Charity rate
From Sept 1 - Dec 31 2005 Charity Rate
.14 cents per mile   (2005)
.14 cents per mile   (2005)
2005 Milage -Medical and moving rate
From Sept 1- Dec 31, 2005 Med Mileage rate
.15 cents per mile   (2005)
.22 cents per mile   (2005)

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


2006 Mileage Rate

For deducting or reimbursing 2006 business mileage on a personally owned vehicle
2006 Mileage- Business rate
2006 Mileage -Charity rate
2006 Milage -Medical and moving rate
.445 cents per mile(2006)
.14 cents per mile (2006)
.18 cents per mile (2006)


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

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2005 Maximum contributions and limits to pensions, IRA, and 401 K

2005 Maximum employee 401K contribution limit




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

2005 Catch up contribution Limit  (over age 50)

 

$ 3,000  (included in above)
 

2005 Employer contribution to 401K is limited          

2005 total additions (employer contribution plus employee contribution) cannot exceed lesser of :
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Up to 25% of compensation

Under age 50:  
$42,000  or 100 % of compensation.
(2006  $44,000)
Age 50 +:
$45,000 or 100 % of compensation

2005 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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$  210,000   (2005)
$  220,000   (2006)
 

2005 Maximum Annual Defined Contribution- Employer Contributions for 2005 to an employee SEP-IRA cannot exceed the lesser of  the following amounts:

2005 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 2005 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
$   42,000   (2005)
$   44,000   (2006)

 

     $450 for 2005 and 2006
  

2005 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





$     10,000     (2005 & 2006)
    + over age 50 catch up

The employer contributes up to 3% of W2 wages which is in addition to the Employee deferral max above (Maximum ER contribution is $10,000)
2005 Simple Catch up Deferral (over age 50)

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$   2,000
      (2006 $2,500)

2005 Limit to  Traditional IRA, nondeductible IRA, or Roth IRA.     Who can contribute





$    4,000 + over age 50 catch up
    

IRA Catch up Deferral (over age 50)

$      500

Learn about small business pensions
2006 pension plan limits

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2005 Maximum Earnings for Retirees

2005 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


2005 under age 65 reduction begins
2006 under age 65 reduction begins
 

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unlimited earnings permitted - no reduction

earnings over $ 12,000 ($1000/mo)
earnings over $ 12,480 ($1040/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 $31,800 (2005)   $33,240 (2006)


Minimum Wage hourly rates

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

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2005 Corporation and Individual Tax Rates

 
Individual Rates  original 2005 source  original 2006 source
  • $ 5,000  2005 Standard deduction for  Single (2006 $5,100)

  • $ 5,000  2005 Standard deduction for Married filing separately

  • $ 7,300  2005 Standard deduction for Head of household
                 2006 (7,550)

  • $10,000 2005 Standard deduction for Married filing Joint
                 (2006 $10,300)  

  •       800 2005 Taxpayer claimed as a dependent

Exemption amount $3,200  (2006 $3300)
Deduction for personal exemption phase out begins
Single $145,950-$268,450   (2006  $150,500-273,000)
Married $218,950-$341,450  (2006 $225,750-348,250)
HOH $182,450-$304,950     (2006  $188,150-310,650)

Deduction for itemized deductions phase out begins when
AGI Threshold
Married, Single, HOH   $145,950  (2006 $150,500)
Married Filing Separate    $72,975  (2006  $75,250)

 
2005 Individual Tax  Rates 10% 15% 25% 28% 33% 35%

Single

7,300
 
next 22,400
to 29,700
next
42,250
 to 71,950
next
78,200
to 150,150
next
176,300
to 326,450
amounts over
 326,450

Head Of Household

10,450
 

next 29,350
to 39,800
next
63,000
 to 102,800
next
63,650
to 166,450
next
160,000
to 326,450
amounts over
326,450

Married Joint

14,600
 

next 44,800
to 59,400
 
next
60,550
 to 119,950
next
62,850
to 182,800
next
143,650
to 326,450
amounts over
 326,450

Click here to download IRS Publication 505 containing these rates

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

 

2006 Tax Changes

2006 Individual Tax  Rates 10% 15% 25% 28% 33% 35%

Single

7,550
 
next  23,100
to 30,650
next
43,550
 to 74,200
next
80,600
to 154,800
next
181,750
to 336,550
amounts over
 336,550

Head Of Household

10,750
 

next 30,300
to 41,050
next
64,950
 to 106,000
next
65,650
to 171,650
next
164,900 to 336,550
amounts over
336,550

Married Joint

15,100
 

next 46,200
to 61,300
 
next
62,400
 to 123,700
next
64,750
to 188,450
next
148,100
to 336,550
amounts over
 336,550

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Click here for:  2005 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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2005 Gift Tax

 
2005 Federal gift tax exclusion- click on annual exclusion
Changes in 2005 gift & estate tax regs

2005 Estate Tax Applicable Exclusion Amount
2006-2008 Estate Tax Applicable Exclusion Amount
 

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$    11,000
      (12,000 in 2006)

$1,500,000
$2,000,000

 

 


Self Employed Health Insurance Deduction

 
Deductible Percentage for 2005 health insurance premiums    100%
   (2002=70% 2003=100% 2004=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

2005 Self -only coverage annual deductible

$1,000-$2,650
(2006 $1,050- $2,700)
$5,100
2006 $5,250

2005 Family coverage annual deductible

$2,000-$5,250
(2006 $2,100-$5,450)
$10,200
2006 $10,500

Monthly Limit on deductions is 1/12 of the lesser of the annual deductible or the maximum annual deductible (2,650 Self or $5,250 Family)

 
Learn more about Health Savings Accounts and administrative requirements  

 
Depreciation

2005 Section 179 depreciation $105,000 see more
(2006  section 179 limit $108,000)
The amount of investment qualifying for this immediate deduction begins to phase out for small businesses with investment in excess of $420,000  (2006  $430,000)

Regs 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
 

2004 rates and limits -
Social Security, Mileage, Pension, 401K, IRA
 

 

 

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