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Year-End 2004
Tax Legislation Update
The Working Families Tax Relief Act of 2004
This legislation extends provisions
that either had expired or that were scheduled to expire at
the end of 2004. Briefly, here are the extended tax breaks.
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The $1,000 per child tax credit
will remain at that level through 2010 instead of
dropping back to $700 in 2005.
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The accelerated marriage penalty
relief set to revert to previous levels next year will
be extended through 2010.
The 15% tax bracket and the standard deduction
for married couples will remain double those of single
taxpayers.
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The expanded 10% tax bracket
continues through 2010.
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The higher exemption from the
alternative minimum tax will apply through 2005 instead
of reverting to lower levels as previously scheduled.
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The $250 above-the-line deduction
for classroom supplies purchased by teachers is extended
for 2004 and 2005. It originally expired at the end of 2003.
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The full $2,000 deduction for the
purchase of clean-fuel vehicles is reinstated for 2004
and 2005.
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The business tax credits for
research and development, welfare-to-work, and work
opportunity are extended through 2005.
The law also includes a number of
technical corrections to previous tax laws, a uniform
definition of “child” throughout the tax code, and
provisions aimed at tax relief for low-income and military
families.
The American Jobs Creation Act of 2004
In this legislation, Congress’s main
purpose was the repeal of the foreign sales
corporation/extraterritorial income (FSC/ETI) tax regime.
The law became much more; it’s a 650-page document
that makes many changes to the tax code, changes that will
affect large and small businesses, farmers, and individual
taxpayers. Among
the changes are the following:
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Taxpayers who itemize will be
allowed to deduct state and local sales tax in lieu of
state and local income tax in 2004 and 2005.
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The $100,000 expensing allowed for
the purchase of business equipment is extended through
2007.
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The first-year expensing limit for
sport utility vehicles purchased for business use is
reduced to $25,000.
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The depreciation period for
qualified leasehold improvements to nonresidential real
property and qualified restaurant property placed in
service after date of enactment and before 2006 is
reduced from 39 years to 15 years.
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Changes are made to the S
corporation rules, including allowing 100 shareholders
(up from 75) and treating up to three generations of
family members as one shareholder.
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The deduction rules are tightened
for donations of vehicles and intellectual property to
charity.
Links:
The Working Family Tax Relief Act - law,
selected other government documents
The American Jobs Creation Act - law,
selected other government documents
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