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Jim Lange's 2004-2005 Tax Planning Card

Jim Lange publishes this reference card which is used by hundreds of university professors, attorneys, judges, and masters.

2004 Quick Calc

MARRIED FILING JOINTLY or QUALIFYING WIDOW(ER)

Taxable Income ($) x% Less($) = Tax
$ 0 - 14,300 x 10% - $ 0 = Tax
14,301 - 58,100 x 15% - 715 = Tax
58,101 - 117,250 x 25% - 6,525 = Tax
117,251 - 178,650 x 28% - 10,043 = Tax
178,651 - 319,100 x 33% - 18,975 = Tax
319,101 and above x 35% - 25,357 = Tax

SINGLE

Taxable Income ($) x% Less($) = Tax
$ 0 - 7,150 x 10% - $ 0 = Tax
7,151 - 29,050 x 15% - 358 = Tax
29,051 - 70,350 x 25% - 3,263 = Tax
70,351 - 146,750 x 28% - 5,374 = Tax
146,751 - 319,100 x 33% - 12,711 = Tax
319,101 and above x 35% - 19,093 = Tax

HEAD OF HOUSEHOLD

Taxable Income ($) x% Less($) = Tax
$ 0 - 10,200 x 10% - $ 0 = Tax
10,201 - 38,900 x 15% - 510 = Tax
38,901 - 100,500 x 25% - 4,400 = Tax
100,501 - 162,700 x 28% - 7,415 = Tax
162,701 - 319,100 x 33% - 15,550 = Tax
319,101 and above x 35% - 21,932 = Tax

MARRIED FILING SEPARATELY

Taxable Income ($) x% Less($) = Tax
$ 0 - 7,150 x 10% - $ 0 = Tax
7,151 - 29,050 x 15% - 358 = Tax
29,051 - 58,625 x 25% - 3,263 = Tax
58,626 - 89,325 x 28% - 5,022 = Tax
89,326 - 159,550 x 33% - 9,488 = Tax
159,551 and above x 35% - 12,679 = Tax

2005 Quick Calc

MARRIED FILING JOINTLY or QUALIFYING WIDOW(ER)

Taxable Income ($) x% Less($) = Tax
$ 0 - 14,600 x 10% - $ 0 = Tax
14,601 - 59,400 x 15% - 730 = Tax
59,401 - 119,950 x 25% - 6,670 = Tax
119,951 - 182,800 x 28% - 10,269 = Tax
182,801 - 326,450 x 33% - 19,409 = Tax
326,451 and above x 35% - 25,938 = Tax

SINGLE

Taxable Income ($) x% Less($) = Tax
$ 0 - 7,300 x 10% - $ 0 = Tax
7,301 - 29,700 x 15% - 365 = Tax
29,701 - 71,950 x 25% - 3,335 = Tax
71,951 - 150,150 x 28% - 5,494 = Tax
150,151 - 326,450 x 33% - 13,002 = Tax
326,451 and above x 35% - 19,531 = Tax

HEAD OF HOUSEHOLD

Taxable Income ($) x% Less($) = Tax
$ 0 - 10,450 x 10% - $ 0 = Tax
10,451 - 39,800 x 15% - 523 = Tax
39,801 - 102,800 x 25% - 4,503 = Tax
102,801 - 166,450 x 28% - 7,587 = Tax
166,451 - 326,450 x 33% - 15,910 = Tax
326,451 and above x 35% - 22,439 = Tax

MARRIED FILING SEPARATELY

Taxable Income ($) x% Less($) = Tax
$ 0 - 7,300 x 10% - $ 0 = Tax
7,301 - 29,700 x 15% - 365 = Tax
29,701 - 59,975 x 25% - 3,335 = Tax
59,976 - 91,400 x 28% - 5,134 = Tax
91,401 - 163,225 x 33% - 9,704 = Tax
163,226 and above x 35% - 12,969 = Tax

Net long-term capital gains will reduce computed Quick Calc tax liability.

HOW to COMPUTE YOUR FEDERAL INCOME TAX

Example: For a married couple with taxable income of $70,000 refer to the MARRIED FILING JOINTLY section of the 2004 chart. See $58,101 - 117,250 and calculate as follows:

70,000 x 25% = $17,500 - $6,525 = $10,975

CALCULATION of TAXABLE INCOME

To determine taxable income, please follow these steps:

  1. List your total income. (U.S. Form 1040, Line 22)
  2. Subtract adjustments to income, which include allowable IRA/SEP/Keogh deductions, alimony paid and one-half of self-employment tax. (Line 35)
  3. You now have adjusted gross income, AGI. (Line 36)
  4. Subtract the larger of the standard deduction or your itemized deductions. (Line 39)
  5. Subtract your deduction for personal exemptions. (Line 41)
  6. Arrive at taxable income. (Line 42)
  7. Insert taxable income into the formula listed above.
  8. Make adjustments for dividends and capital gains.

REDUCTION in TAX RATES on CAPITAL GAINS and QUALIFYING DIVIDENDS

The maximum capital gains tax rate for most capital assets is 15%.  The maximum tax rate on qualifying dividends is also 15%.

PERSONAL EXEMPTIONS

Personal exemptions are the amount you may deduct for yourself, your spouse, and your dependents.

For 2004 and 2005, the personal exemption deductions are $3,100 and $3,200, respectively.

High income taxpayers will suffer phase-outs of their exemptions and dependents.

PENNSYLVANIA INCOME TAXES

PA Individual Income Tax

The Pennsylvania individual income tax rate remains at 3.07% for 2004 and 2005.

PA Corporate Tax

The Corporate Tax rate is 9.99% for 2004. The Capital Stock Tax rate is 6.99 mills in 2004.

ESTATE and INHERITANCE TAXES

Pennsylvania Inheritance Tax
Pennsylvania taxes transfer to lineal heirs (such as children, grandchildren, parents and grandparents) at a rate of 4½%.  Transfers to siblings are taxed at 12% and all other transfers are taxed at 15%.  Pennsylvania still allows tax-free transfers to spouses during life and at death.

Federal Estate and Gift Tax
The federal government allows unlimited marital deduction for surviving spouses who are American citizens.

The amount from an estate that can be transferred at death without incurring federal estate taxes, will increase according to the following schedule:

2004 $ 1,500,000
2005 1,500,000
2006 2,000,000
2007 2,000,000
2008 2,000,000
2009 3,500,000
2010 *See Below
2011 1,000,000

The gift tax exclusion for 2004 and 2005 is $11,000/year per donee.

* Full repeal of estate tax; 
gift tax at top income tax rate

2004 and 2005 STANDARD DEDUCTIONS

The standard deduction is the amount that you may deduct if you do not itemize your deductions.

2004
Standard
Deduction		 2004
+ Age 65 or Over
or Blind
(EACH)		 2005
Standard
Deduction		 2005
+ Age 65 of Over
or Blind
(EACH)
Married Filing Jointly
Qualifying Widow(er)		 $9,700 $ 950 $10,000 $1,000
Single $4,850 $1,200 $5,000 $1,250
Head of Household $7,150 $1,200 $7,300 $1,250
Married Filing Separately $4,850 $ 950 $5,000 $1,000

SOCIAL SECURITY/SELF-EMPLOYMENT TAX

Taxable Wages (%) Maximum Amount S.E.(%) Maximum S.E.
2005 $ 0 - 90,000 7.65% $6,885
15.3%
$13,770
2005 90,001 and above 1.45% unlimited
2.9%
unlimited

Please note that there are three components of Social Security Tax:

1. Social Security Tax 5.60% 
2. Disability .60% 
3. Medicare Hospital 1.45% 
Paid by Employees & Employers 7.65%*

*The Self-Employment Tax is twice this amount. Also please note that one-half of the self-employment tax is deductible as an adjustment to income.

2004 AND 2005 MAXIMUM RETIREMENT PLAN CONTRIBUTIONS

Plan Type 2004 2004
Age 50 or Over		 2005 2005
Age 50 or Over
Roth IRA $3,000 $3,500 $4,000 $4,500
IRA $3,000 $3,500 $4,000 $4,500
SEP (Self-Employed) 41,000 41,000 42,000 42,000
SEP (Employee) 41,000 41,000 42,000 42,000
403(b)(Employee) 13,000 16,000 14,000 18,000
Self-Employed Profit Sharing (Keogh) 41,000 41,000 42,000 42,000
Self-Employed Money Purchase (Keogh) 41,000 41,000 42,000 42,000
401K (Employee and Self-Employed) 13,000 16,000 14,000 18,000
SIMPLE 9,000 10,500 10,000 12,000

James Lange provides the following services:

  • Traditional accounting and tax return preparation
  • Financial and investment services
  • Insurance services
  • Professional speaking

Please visit our web site, www.paytaxeslater.com and sign up for our free e-mail newsletter. You can also request our complimentary special report, Optimal Distribution Planning for IRAs and Retirements Plans.

With your best interest in mind,

James Lange
Certified Public Accountant
Attorney at Law

Disclaimer: Material provided is general in nature and does not, nor is it intended as a rendering of professional services. James Lange, CPA/Attorney is not responsible for the results obtained from using the contents, nor any errors or omissions. Do not act upon information contained herein without consulting James Lange, CPA/Attorney or other appropriate advice based on thorough evaluation of the facts relating to your specific circumstances.