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Tax Facts at a Glance

This information on this page is provided to assist businesses and individuals.   It is accurate to the best of our knowledge. 

Tax Facts Updated March, 2006 with 2005 changes

However, nothing on this page should be used to answer any particular financial question or be considered professional advice.

Please contact us for specific advice. 

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Deductions
For the 2005 Tax Year

(see below for 2006)

 

Federal

California

Standard Deductions

Single

$5,000

$3,254

Married Filing Jointly or Surviving Spouse

$10,000

$6,508

Married Filing Separately

$5,000

$3,254

Head of Household

$7,300

$6,508

Additional for 65 or Older or Blind - Married

$1,000

 

Additional for 65 and Older Blind - Unmarried

$1,250

 

Taxpayer claimed as a dependent

$800

 

Personal/Dependent Exemption
Social Security Number is required - $50 penalty

$3,200

 

 

 

 

Contact Information

 

Deductions
For the 2006 Tax Year

(see above for 2005)

  Federal California
Standard Deductions
Single $5,150 Not yet available
Married Filing Jointly or Surviving Spouse $10,300
Married Filing Separately $5,150
Head of Household $7,550
Additional for 65 or Older or Blind - Married $1,000
Additional for 65 and Older Blind - Unmarried $1,250
Taxpayer claimed as a dependent $850 on $300 + of earned income

Personal/Dependent Exemption
Social Security Number is required - $50 penalty

$3,300
Tax and Financial Planning Guide for 2006-7 Cover Picture

Automobile Standard Mileage Allowances

 

2005

2006

Business

Jan - Aug
.405/mile
* * *
Sep - Dec
.48.5

.445/mile

Charity

.14/mile

.14/mile

Medical/Moving

Jan - Aug .15/mile
* * *
Sep - Dec
.22/mile

.18/mile

Contact Information

Tax Preparation for Businesses and High Net Worth Individuals by Accounting Professionals

California Credits
For the 2005 Tax Year

 

 

California

California Exemption Credits

Single/Separate or Head of Household

 

$87

Joint/Surviving Spouse

 

$174

Dependent

 

$272

Blind or over 65

 

$87

Senior Head of Household Credit

2% of California taxable income, maximum California AGI of $56,262 maximum credit of $1,060

Joint Custody Head of Household Credit     - and -
Dependent Parent Credit

Each is 30% of net tax, with maximum credit of $346

Child and Dependent Care Credit
California allows a  percentage of federal credit based on the California AGI .
California allows these credits:

California AGI from $0  to $40,000

 

50%

California AGI from $40,001  to $70,000

 

43

California AGI from $70,001  to $100,000

 

34

California AGI over $100,001

 

0%

Credentialed Teacher's Retention Credit

 

Years

Credit

Credit suspended for taxable years 2004 and 2005  

0

Renter's Credit

Joint/Head-of-Household/Surviving Spouse if AGI is below $61,588

 

$120

Single/Married Filing Separate if AGI is below $30,794

 

$60

 
Contact Information

Tax Data 2005
for Tax Year 2005 unless otherwise indicated

 

  Federal California
Section 179 Deduction 105,000 25,000

Beginning of Personal Exemption Phase-out
Range based on Federal AGI

Single $145,950 California doesn't have Personal Exemptions which are handled in the same way as the federal
Married Filing Jointly $218,950
Married Filing Separately $109,475
Head of Household $182,450
Surviving Spouse $218,950

Beginning of Itemized Deduction Phase-out
Range based on AGI

Single $145,950 $143,839
Married Filing Jointly/Surviving Spouse $145,950 $287,682
Married Filing Separately $72,975 $143,839
Head of Household $145,950 $215,762
Rate Reduced over federal AGI  limits 3% 6%

Schedule A Threshold/Limits

Medical (of AGI ) based on federal threshold 7.5% Follows federal
Miscellaneous (of AGI ) based on federal threshold 2%

Alternative Minimum Tax (AMT) Rate

AMTI Less Exemption up to $175,000 26% 7%
AMTI Less Exemption over $175,000
($87,500) if Married Filing Separately
28% 7%

AMT Exemption Amounts

Married Filing Jointly/Surviving Spouse $58,000 $70,531
Single, Head of Household $40,250 $52,898
Married Filing Separately, Estates and Trusts $29,000 $35,263

AMT Exemption Phase-out Amounts

Married Filing Jointly/Surviving Spouse $150,000 $264,488
Single and Head of Household $112,500 $198,366
Married Filing Separately, Estates, and Trusts $112,500 $132,242

Self-Employed Health Insurance
Adjustment for AGI :

Percentage of total qualifying payments for health insurance 100% Follows federal

Maximum Rate SEP -IRA and Keogh Profit Sharing

20%

Beginning/Ending of U.S. Savings Bond Interest Exclusion
Based on Modified AGI

Joint Return $94,850/$121,850 Federal rules only
Unmarried $51,200/$76,200
Married Filing Separately No Exclusion

California SDI
(Deductible as a tax for federal purposes.  Amounts paid to a voluntary program in lieu of the state programs are not deductible, but may be creditable on Form 540 with multiple employees.)

  2005 2006
Wages – Total annual limit $79,418 $79,418
Rate 1.08% 0.8%
Tax $857.71 $635.34
Tax and Financial Planning Guide for 2006-7 Cover Picture

Tax Preparation for Businesses and High Net Worth Individuals by Accounting Professionals

Federal Tax Rate Schedule
2005

Taxable Income is Over

But Not over

Pay

+ %

Of the Amount Over

Single Individuals

$0

$7,300

$0

10%

$0

$7,300

$29,700

$730

15%

$7,300

$29,700

$71,950

$4,090

25%

$29,700

$71,950

$150,150

$14,652.50

28%

$71,950

$150,150

$326,450

$36,548.50

33%

$150,150

$326,450

and more

$94,727.50

35%

$326,450

Head of Household

$0

$10,450

$0

10%

$0

$10,450

$39,800

$1,045

15%

$10,450

$39,800

$102,800

$5,447.50

25%

$39,800

$102,800

$166,450

$21,197.50

28%

$102,800

 

$166,450

$326,450

$39,019.50

33%

$166,450

$326,450

and more

$91,819.50

35%

$326,450

Married Individuals Filing Jointly and Qualifying widow(er)

$0

$14,600

$0

10%

$0

$14,600

$59,400

$1,460

15%

$14,600

$59,400

$119,950

$8,180

25%

$59,400

$119,950

$182,800

$23,317.50

28%

$119,950

$182,800

$326,450

$40,915.50

33%

$182,800

$326,450

and more

$88,320

35%

$326,450

Married Individuals Filing Separately

$0

$7,300

$0

10%

$0

$7,300

$29,700

$730

15%

$7,300

$29,700

$59,975

$4,090

25%

$29,700

$59,975

$91,400

$11,658.75

28%

$59,975

$91,400

$163,225

$20,457.75

33%

$91,400

$163,225

and more

$44,160

35%

$163,225

Estates and Non-Grantor Trusts

$0

$2,000

$0

15%

$0

$2,000

$4,700

$300

25%

$2,000

$4,700

$7,150

$975

28%

$4,700

$7,150

$9,750

$1,661

33%

$7,150

$9,750

and more

$2,519

35%

$9,750

 

Contact Information

 

California Tax Rate Schedule
2005

Taxable Income is Over

But Not over

Pay

+ %

Of the Amount Over

Single Individuals, Married Filing Separately, Fiduciary Tax Returns

$0

$6,319

$0

1%

$0

$6,319

$14,979

$63.19

2%

$6,319

$14,979

$23,641

$236.39

4%

$14,979

$23,641

$32,819

$582.87

6%

$23,641

$32,819

$41,476

$1,133.55

8%

$32,819

$41,476

and more

$1,826.11

9.3%

$41,476

Married Filing Jointly, Qualifying Widow(er)

$0

$12,638

$0

1%

$0

$12,638

$29,958

$126.38

2%

$12,638

$29,958

$47,282

$472.78

4%

$29,958

$47,282

$65,638

$1,165.74

6%

$47,282

$65,638

$82,952

$2,267.10

8%

$65,638

$82,952

and more

$3,652.22

9.3%

$82,952

Unmarried Head of Household

$0

$12,644

$0

1%

$0

$12,644

$29,959

$126.44

2%

$12,644

$29,959

$38,619

$472.74

4%

$29,959

$38,619

$47,796

$819.14

6%

$38,619

$47,796

$56,456

$1,369.76

8%

$47,796

$56,456

and more

$2,062.56

9.3%

$56,456

Contact Information

 

Tax Preparation for Businesses and High Net Worth Individuals by Accounting Professionals

Luxury Auto Depreciation Limit

See also  Post-9/11 Depreciation information.

Year

1st Year

2nd Year

3rd Year

4th Year

2002 $3,060 $4,900 $2,950 $1,775
2003 $3,060 $4,900 $2,950 $1,775
2004 $2,960 $4,800 $2,850 $1,675
2005 $2,960 $4,700 $2,850 $1,675
Tax and Financial Planning Guide for 2006-7 Cover Picture

FICA and Self Employment Tax
2005 and 2004

 

2005

2004

Maximum FICA Tax Rate

Wage Base (Income subject to Social Security Tax)

$90,000

$87,900

FICA Tax Rate

6.2%

6.2%

SE Tax Rate

12.4%

12.4%

Maximum Medicare

HI Wage Base

Unlimited

Unlimited

Medicare HI Rate

1.45%

1.45%

Medicare HI Self-Employment Rate

2.9%

2.9%

Maximum Total
FICA/Medicare or SE Tax

Unlimited

Unlimited

Earned Income Ceilings for Social Security Benefits

Under age 65 (or full retirement age)

$12,000

$11,640

65-70 (or full retirement age)

Unlimited

Unlimited

Age 70 and older

Unlimited

Unlimited

Medicare Part B Premium

$78.20/month

$66.60/month

Contact Information

Tax Preparation for Businesses and High Net Worth Individuals by Accounting Professionals

Retirement Plan Limitations
2005 and 2004

 

2005

2004

Maximum 401(k)/403(b) Deferral

$14,000

$13,000

Maximum Defined Contribution Plan Contribution

$42,000

$41,000

Maximum Annual Benefit for Defined Benefit Plans

$170,000

$165,000

Annual Compensation Limit for Computing Plan Benefits

$210,000

$205,000

Annual Compensation Limit for the Definition of Highly Compensated Employee, Section 414 (q) (1)

$90,000

$90,000

Compensation Minimum for SEP coverage

$450

$450

Maximum Contribution for SIMPLES

$10,000

$9,000

Catch-up Contribution (taxpayers 50 and older)
Applies to deferral plans only

$4,000

$3,000

Key Employee for Top Heavy Purposes
A "Key Employee" is one of these three:

·         Officers earning over

$135,000

$130,000

·         A 5% Owner of Employer earning any amount

·         A 1% Owner of Employer earning over

$150,000

$150,000

Contact Information

 

Traditional and Roth IRA's
2005 and 2004

 

2005

2004

Contribution Limit

$4,000

$3,000

Catch-up Contribution (50 and older)

$1,000

$500

IRA Deduction Phase-out for Special Contributions

Single

$50,000 - $60,000

$45,000 - $55,000

Married Filing Jointly

$70,000 - $80,000

$65,000 - $75,000

IRA Deduction Phase-out for Spousal Contributions

Married Filing Separately

$0, - $10,000

Married Filing Jointly

$150,000 - $160,000

Roth IRA Contribution

Single

$95,000 - $110,000

Married Filing Jointly

$150,000 - $160,000

Married Filing Separately

$0 - $10,000

Roth IRA Conversion Phase-out

Single

$100,000

Married Filing Jointly

$100,000

Married Filing Separately

Ineligible

Contact Information

Tax Preparation for Businesses and High Net Worth Individuals by Accounting Professionals

Estate and Gift Tax

Phase-out and Repeal of Estate and Generation-Skipping Transfer Tax.

Calendar Year

Estate/GST tax
Death time transfer Exemption
Highest estate and gift tax rates
2002 $1million/$1.1 million 50%
2003 $1million/$1.1 million 49%
2004 $1.5 million 48%
2005 $1.5 million 47%
2006 $2 million 46%
2007-08 $2 million 45%
2009 $3.5 million 45%
2010 Not applicable (taxes repealed) Top individual rate (gift tax only)

Gift tax:  Annual Gift Limitation of $11,000 for 2002 and later years.  Lifetime Exemption of $1 million after December 31, 2001.

Contact Information

Education-Related Tax Benefits

Deduction for Qualified Higher Education Costs

Calendar Year Single AGI MFJ AGI Deduction
2005 $80,000* $160,000* $4,000
* Taxpayers with AGI above these thresholds are not entitled to a deduction.

Coverdell Education Savings Accounts

Annual Contribution Limit

$2,000

Income Eligibility

Single $95,000 - $110,000
Married Filing Jointly $190,000
As a couple's income increases from $190,000 to $220,000, their contribution limit phases out

Qualified Tuition Programs
Deduct $3,000 in higher education expenses .
Beginning income of Phase-Out range:

Single $50,000
Married Filing Jointly $100,000

Student Loan Deductions
Deduct interest for the life of the loan.
Beginning incoming Phase-Out range:

Single $50,000
Married Filing Jointly $100,000
Contact Information

Tax Preparation for Businesses and High Net Worth Individuals by Accounting Professionals

This information on this page is provided to assist businesses and individuals.   It is accurate to the best of our knowledge. 

However, nothing on this page should be used to answer any particular financial question or be considered professional advice.

Please contact us for specific advice. 

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