Many tax provisions have a requirement that they be adjusted for inflation. The low inflation rate over the last twelve months means that most tax figures show a minimal increase over last year. The IRS released the changes for 2004 recently. Among the more important are:
- Personal exemption rises to $3,100 from $3,050
- Standard deduction for couples filing joint returns and surviving spouses goes to $9,700. For heads of households it increases to $7,150, and for single taxpayers and married individuals filing separately, the amount is $4850.
- Itemized deduction phase-out begins at an adjusted gross income of $142,700 or $71,350 for married filing separately.
- Gift tax exclusion remains at $11,000
- Election to expense certain depreciable assets increases to $102,000
- Allowable contributions to 401(k) plans increases to $13,000
The IRS has also reminded taxpayers that while some travel expenses under $75 need not be evidenced by receipts, taxpayers still must prove the deductibility of the expense by maintaining adequate records.
This article should not be considered advice for individuals or organizations without consulting a tax advisor. Reprinted with permission from ©Pannell Kerr Forster, P.C.
