2004 Tax Law Changes (2/2)

? Business taxpayers may take a Section 179 expense deduction for up to $102,000 of qualifying equipment purchases, with this limit reduced by the amount that the total cost of section 179 property placed in service during the year exceeds $410,000. The limit for certain sport utility and other vehicles that are not subject to the passenger auto limits and were placed in service after Oct. 22, 2004, is $25,000. IRS Publication 553, Highlights of 2004 Tax Changes, will have more details on the new provisions. It will be available in February 2005 for download or by calling (toll-free) 1-800-TAX-FORM (1-800-829-3676). Inflation Adjustments for 2004 The filing requirements, personal exemption, standard deduction and maximum Earned Income Tax Credit amounts are among the inflation-adjusted items. ? The 2004 gross income filing requirements are: Single — $7,950 Head of household — $10,250 Married filing jointly — $15,900 Married filing separately — $3,100 Qualifying widow(er) — $12,800 Different amounts apply if the taxpayer or spouse is age 65 or older, or if the taxpayer can be claimed as a dependent on someone else's return. There are also other specific situations that require the filing of a return, such as when the net earnings from self employment are $400 or more. The personal exemption amount for 2004 is $3,100 — $50 more than Year 2003. Higher income taxpayers may have to reduce the personal exemption amount they ? claim if their adjusted gross income exceeds: Single — $142,700 Head of household — $178,350 Married filing jointly or Qualifying widow(er) — $214,050 Married filing separately — $107,025 These taxpayers use a worksheet in the tax package to figure their deduction for exemptions ? The standard deduction amounts for 2004 are: Single or Married Filing Separately — $4,850 Head of household — $7,150 Married filing jointly or Qualifying widow(er) — $9,700 Different amounts apply if the taxpayer or spouse is blind or is age 65 or older, or if the taxpayer can be claimed as a dependent on someone else's return. ? The Earned Income Tax Credit amounts for 2004 are: Qualifying child Income Under* Maximum Credit Income for Maximum Credit One $30,338 $2,604 $7,650 — 14,049* Two or more $34,458 $4,300 $10,750 — 14,049* None $11,490 $390 $5,100 — 6,399* (*These amounts are $1,000 higher for married persons filing joint returns.) The maximum amount of investment income a person may have and still be eligible for the Earned Income Tax Credit increased to $2,650.