How you can resist funding the government → about the IRS and U.S. tax law/policy → how is tax law/policy/administration changing? → yearly adjustments of deductions/exemptions/credits/thresholds

The IRS has let us know a little more about what our tax forms will look like when we’re scrambling to get them done in April, 2006:

CCH Tax News has more:

The threshold amounts at which the phaseout of the tax benefit of the personal exemption begins and ends and the “applicable amount” for triggering the phaseout of itemized deductions have also been determined.

The standard deduction amount for individuals who may be claimed as dependents by other taxpayers for 2005 may not exceed the greater of $800, or the sum of $250 and the individual’s earned income. The additional standard deduction amounts for the aged and for the blind are $1,000 for each, and increase to $1,250 if an individual is unmarried and is not a surviving spouse. Further, the amount used to reduce the net unearned income of certain minor children subject to the “kiddie tax” at their parents’ marginal rate is $800. The maximum credit allowed in the case of an adoption of a child with special needs is $10,630; the maximum credit allowed with regard to other adoptions is the amount of qualified adoption expenses up to $10,630.

For tax years beginning in 2005, the value used in determining the potentially refundable amount of the child tax credit is $11,000. With respect to education credits, 100 percent of qualified tuition and related expenses not in excess of $1,000 and 50 percent of such expenses in excess of $1,000 are taken into account in determining the amount of the Hope Scholarship Credit. Additionally, a taxpayer’s modified adjusted gross income in excess of $43,000 ($87,000 for joint filers) is taken into account in determining the reduction in the amount of the Hope Scholarship and Lifetime Learning Credits otherwise allowable under Code Sec. 25A(a).

Indexing has expanded the earned income credit (EIC) for 2005. The earned income limit for the maximum credit has increased to $7,830 for a qualifying individual with one child, $11,000 for a taxpayer with two or more children, and $5,220 for a taxpayer with no children. The EIC will be denied if the aggregate amount of certain investment income exceeds $2,700.

Other inflation adjustments announced by the IRS for 2005 concern:

1. the low-income housing credit;
2. the amount used in determining the exemption from the alternative minimum tax for a child subject to the “kiddie tax;”
3. the amounts deemed substantiated when paid by eligible employers in the transportation mainline pipeline construction industry under an accountable plan to employees;
4. the overall limitation on itemized deductions;
5. the limitations on the exclusion from gross income for qualified transportation fringes;
6. the income from United States savings bonds for taxpayers who pay qualified higher education expenses;
7. the maximum amount that an employer can exclude from an employee’s gross income under an adoption assistance program;
8. the amounts used to calculate the state ceiling for the volume cap for private activity bonds;
9. the election to expense certain depreciable assets under Code Sec. 179;
10. the eligible long-term care premiums;
11. the amounts used to determine if a health plan is a “high deductible health plan” for purposes of contributions to medical savings accounts;
12. the maximum deduction for interest paid on qualified education loans;
13. the dues paid to agricultural or horticultural organizations;
14. the insubstantial benefit limitations for contributions associated with charitable fund-raising campaigns;
15. the maximum amount of contributions that may be made to a “qualified funeral trust;”
16. the income and net worth levels for determining expatriation to avoid tax;
17. the maximum amount by which the estate tax valuation method may decrease the value of qualified real property included in a decedent’s estate;
18. the annual exclusion for gifts;
19. the amount of the excise tax on passenger air transportation;
20. the reporting exceptions for exempt organizations with nondeductible lobbying expenditures;
21. the reporting large gifts received from foreign persons;
22. the maximum amount of a casual sale of personal property below which a tax lien will not be valid against a purchaser;
23. the value of property exempt from levy under Code Sec. 6334(a)(2);
24. the dollar amount used to determine the “2-percent portion” (for purposes of calculating interest) of the estate tax payable in installments;
25. the hourly rate at which attorneys’ fees may be awarded to a prevailing party;
26. the periodic payments received under qualified long-term care insurance contracts or certain life insurance contracts;
27. the safe harbor rules for broker commissions on guaranteed investment contracts or investments purchased for a yield restricted defeasance escrow; and
28. the contribution limits for health savings accounts.

Whew! Bookmark this page and come back after you’ve finished this year’s taxes so you can set up your spreadsheet for next year and figure out how much you can safely earn. You can also get the numbers directly from the horse’s mouth at the Treasury Department’s web site.

The IRS has adjusted for inflation several of the numbers in its tax provisions for next year — this includes expanding tax brackets, bumping the standard deduction and personal exemption amounts, and, for the first time in 2007, increasing the amount of adjusted gross income you can earn and still qualify for the retirement savings tax credit. Depending on your filing status, you could have $500–$2,000 more AGI in 2007 and still qualify.

There’s a new issue of NWTRCC’s newsletter out. Contents include:

• V. Schneider’s take on the ramifications of the Affordable Care Act for war tax resisters. I’ve shared some of my experiences with the Act’s provisions as a low-income, return-filing resister here at The Picket Line. Ms. Schneider writes about the challenges of the Act from the perspective of a resister who does not file returns, and therefore has no clear way of proving that she qualifies for the Act’s insurance subsidies. Schneider has some helpful recommendations for non-filling resisters who cannot afford non-subsidised insurance.
• Some notes on the new federal standard deduction and personal exemption amounts for the upcoming tax year, on the new IRS program that allows you to download some of the files the agency keeps on you, on a new website that keeps track of the legal aspects of alternative currencies, and on the troubles of the increasingly overwhelmed and under-budgeted IRS.
• Jason Rawn’s review of 99 Tactics of Successful Tax Resistance Campaigns, which begins: “As you may have just been thinking, three bags of cobras, homespun cloth, home-brewed beer, and transvestite Welshmen are all things that relate directly to tax resistance…”
• Some war tax resistance news, including a report of a Martin Luther King Jr. Day war tax resistance display at a recent anti nuclear weapons protest, a mention of some recent honors given to war tax resisters Robin Harper and Joanne Sheehan, and a brief note on the conviction and jailing of Quaker war tax resister Joseph Olejak.
  • You can find more about the Olejak case in this recent article from the Times-Union. Olejak is spending several consecutive weekends in prison, and has agreed (in a plea bargain) to partially and incrementally pay the $242,684 the IRS says he owes since he stopped paying in 1994.
• Some news about NWTRCC itself:
  • The group is looking for people who want to serve on its Administrative Committee.
  • The War Tax Resisters Penalty Fund — which helps to reimburse any penalties and interest seized from a war tax resister by the government — is now under new management.
  • The next NWTRCC national gathering is scheduled for May 2–4 and will be held in San Diego, California.
• Robin Harper reflects on the development of “redirection” as a war tax resistance tactic: “I think it is fair to say that the essence and origins of the very widespread practice today of WTRs conscientiously redirecting their refused taxes into channels of constructive activism, community building, and addressing human needs, can be traced to [his own case in] 1958.”