UNIFORM DEFINITION OF QUALIFYING CHILD
Beginning in 2005, one definition of a qualifying child will apply for each of the following tax benefits.
Dependency exemption.
Head of household filing status.
Earned income credit (EIC).
Child tax credit.
Credit for child and dependent care expenses.
In general, all four of the following tests must be met to claim someone as a qualifying child.
The child must be your child (including an adopted child, stepchild, or eligible foster child), brother, sister, stepbrother, stepsister, or a descendent of one of these relatives.
An adopted child includes a child lawfully placed with you for legal adoption even if the adoption is not final.
An eligible foster child is any child who is placed with you by an authorized placement agency or by judgement, decree, or other order of any court of competent jurisdiction
Traditional IRA income limits. If you have a traditional individual retirement account (IRA) and are covered by a retirement plan at work, the amount of income you can have and not be affected by the deduction phaseout increases. The amounts vary depending on filing status.
Limit on elective deferrals. The maximum amount of elective deferrals under a salary reduction agreement that can be contributed to a qualified plan increases to $14,000 ($18,000 if you are age 50 or over). However, for a SIMPLE plan, the amount increases to $10,000 ($12,000 if you are age 50 or over).
IRA deduction expanded. The amount you, and your spouse if filing jointly, may be able to deduct as an IRA contribution will increase to $4,000 ($4,500 if age 50 or older at the end of 2005).
For tax years beginning in 2005, the allowable deductions for the standard mileage rate for the period January 1, 2005, through August 31, 2005, are as follows:
Business miles. The standard mileage rate for the cost of operating your car increases to 40.5 cents a mile for all business miles driven.
Charitable services. The standard mileage rate allowed for use of your car when you use your car to provide charitable services to a charitable organization is 14 cents a mile.
Charitable services — Hurricane Katrina relief services. If you used your vehicle in giving services to a charitable organization to provide relief related to Hurricane Katrina, the standard mileage rate allowed for use of your car is 29 cents a mile for miles driven after August 24, 2005, and before September 1, 2005.
Medical reasons. The standard mileage rate allowed for use of your car for medical reasons is 15 cents a mile.
Moving. The standard mileage rate for determining moving expenses is 15 cents a mile.
The allowable deductions for the standard mileage rate for the period September 1, 2005, through December 31, 2005, are as follows:
Business miles. The standard mileage rate for the cost of operating your car increases to 48.5 cents a mile for all business miles driven.
Charitable services. The standard mileage rate allowed for use of your car when you use your car to provide charitable services to a charitable organization remains at 14 cents a mile.
Charitable services — Hurricane Katrina relief services. If you used your vehicle in giving services to a charitable organization to provide relief related to Hurricane Katrina, the standard mileage rate allowed for use of your car is 34 cents a mile.
Medical reasons. The standard mileage rate allowed for use of your car for medical reasons is 22 cents a mile.
Moving. The standard mileage rate for determining moving expenses is 22 cents a mile.