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New Year to Ring in Tax Changes

(RIVERWOODS, ILL., December 21, 2004) – Taxpayers were spared some unpleasant changes scheduled to take effect after the stroke of midnight on December 31, according to CCH INCORPORATED (CCH), a leading provider of tax law information, software and services (tax.cchgroup.com). By passing the Working Families Tax Relief Act, Congress kept the child tax credit at $1,000, preserved the 10-percent bracket at its current level and maintained “marriage penalty” relief.  But a number of tax-related changes will become effective with the new year – most, but not all, favorable for taxpayers. 

Standard Deductions – The standard deduction increases to $10,000 for married couples filing jointly, $5,000 for single taxpayers or married taxpayers filing separately, $7,300 for heads of households. The additional standard deduction for those age 65 or older or who are blind moves up to $1,000 for married individuals and surviving spouses.  It increases for single filers to $1,250.

Personal Exemption – Each personal exemption will be worth $3,200 on 2005 returns.

Mileage Deductions – The mileage deduction increases to 40.5 cents per mile for business use of a car; 15 cents per mile for medical or moving expenses; 14 cents per mile for charitable use.

Rules for Donating Cars Change – For donated cars worth more than $500, if the charity sells the car, the donor can take no more than the selling price as a charitable deduction.

IRA Contributions – The amount you can contribute to a traditional or Roth IRA increases from $3,000 to $4,000 per year.  The limit on annual “catch up” contributions for those age 50 and older remains $500.

IRA Phaseouts – In 2005, the ability for those covered by a qualified plan to make a deductible contribution to an IRA will begin to phase out at $50,000 in adjusted gross income and end at $60,000 for single filers. For marrieds filing jointly, the phaseout range is $70,000 to $80,000.

Contributions to 401(k)s, 403b and SEP Plans – The annual limit on elective deferrals to 401(k), 403(b) and SEP plans increases to $14,000 for 2005.  The annual limit on “catch-up” contributions to these plans for those 50 and older increases to $4,000.

FICA, Social Security Changes – The FICA wage base increases to $90,000.  Workers under full retirement age who are receiving Social Security benefits can earn up to $12,000 in 2005, or $1,000 per month, without having their benefits reduced.

Tax Brackets Increase – Tax brackets have been adjusted to produce the following for 2005:

Married Filing Jointly (& Surviving Spouse)

Married Filing Separately

Single Filers

    Head of Household

About CCH INCORPORATED

CCH INCORPORATED (www.tax.cchgroup.com), based in Riverwoods, Ill., is a leading provider of tax and accounting information, software and services. It has served tax, accounting and business professionals and their clients since 1913. CCH is a Wolters Kluwer company (www.wolterskluwer.com).

Wolters Kluwer is a leading multinational publisher and information services company. The company's core markets are spread across the health, tax, accounting, corporate, financial services, legal and regulatory, and education sectors. Wolters Kluwer has annual revenues (2003) of €3.4 billion, employs approximately 18,750 people worldwide and maintains operations across Europe, North America and Asia Pacific. Wolters Kluwer is headquartered in Amsterdam, the Netherlands. Its depositary receipts of shares are quoted on the Euronext Amsterdam (WKL) and are included in the AEX and Euronext 100 indices.

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