2005 Tax Presentation

Quiet Year in Tax Land

(and Tax Software Land)

CHANGES APPLYING TO 2004 TAX YEAR

Standard Deduction $9700 for Joint $4850 for Single $7100 Head of Household

Exemption Rises to $3100 Phase outs from $107,025 to $214,050

IRA’s to $13,000 ($16K if 50+) Mileage-Business 37.5 cents/mile (14 for Medical)

CHANGES APPLYING TO 2004 TAX YEAR(CONT.)

Sales or State Income Tax Deduction Hummer SUV Rule (1st year limit of $25,000) Child Care Changes (Calculates automatically) Clean Fuel Vehicles Credit Retained at $2k for 2005 Medical Savings Accounts (In conjunction with high

deductible Major Medical Policies.) Lots of special rules for military. 2-2004 Laws may impact forms and provisions.

PROBLEMS/OPPORTUNITIES

Contributions – Take the time to price with Value Guide

Watch for the AMT Level at which it kicks in hasn’t changed since enacted. Very complicated (may need to do draft returns before end

of year.) Triggers – Large Capital Gains – Large deductible

estimated tax payments – Large amounts of dividends. MN AMT can be accessed on a negative net income.

INTERNET SITES

http://www.irs.gov (Official Federal Government site with forms and instruction booklets)

Each State has an official site-Minnesota’s is http://www.taxes.state.mn.us

http://www.hrblock.com http://turbotax.com http://taxes.about.com (fairly general overview) http://www.satruck.com/ValueGuide.asp

(Salvation Army Current Contribution Guide)

GENERAL ADVICE

During tax time, it is hard to reach knowledgeable people by phone. Try the official web sites first since most questions can be answered from the on-line material.

Auto Donations

New Rules in 2005 Deduction is Limited if Charity Sells Vehicle

To Value Realized by Charity

Charity Must Notify Giver of Intended Use Within 30 Days

CREATES MANY NEW ISSUES

TAX SOFTWARE

Consumer software is fairly standard. Two major ones

Tax Cut TurboTax

Current User – Easiest to Stay With Last Year’s Bundles Offer Considerable Savings – (Based on

Rebates)