W3C Valid XHTML 1.0
Of course, tax year 2006 includes some code changes

Pretty much every year the IRS makes changes to the tax code and 2006 will be no different. Here are a few of some of the changes that may affect businesses and individuals.

Mileage: The IRS raised the mileage rate twice in 2005, and they are doing so again in 2006. The new mileage rate will be 44.5 cents per mile, down from 2005’s final adjustment of 48.5 cents per mile.

Self-employment tax: The maximum amount of net earnings subject to the social security part of the self-employment tax for tax years beginning in 2006 has increased to $94,200 from $90,000 in 2005. All net earnings of at least $400 are subject to the Medicare part of the tax.

Deduction for energy-efficient commercial properties: You can deduct the cost of energy efficient building property, for buildings put in use in 2006 or 2007. The maximum deduction for any building for all tax years is $1.80 multiplied by the square footage of the building. The property must be certified as being part of a plan to reduce annual energy and power costs for interior lighting systems, heating, cooling and ventilation systems and/or building envelope systems by at least 50 percent in comparison to a reference building that meets certain requirements.

Gift tax: The gift tax annual exclusion increases in 2006 to $12,000 for each individual you gift. In other words, you generally can give up to $12,000 each to as many people as you want in 2006 and those gifts will not be taxable.

Sales tax deduction: This deduction is no longer in effect. The American Jobs Creation Act of 2004 had given taxpayers the option to claim state and local sales taxes instead of state and local income taxes when deductions were itemized. The last year this option was available was 2005.

Long distance telephone tax refund: In May 2006 the IRS announced that it was going to stop collecting the 3 percent federal excise tax on long distance phone bills. Both individuals and businesses will be able to request a refund on the taxes they paid on their long distance telephone bills for the last 41 months. For individuals, there IRS will provide a chart to simplify the process. Businesses must complete form 8913. The refund is capped at 2 percent of the total telephone expense for businesses with 250 or fewer employees.

Energy efficient vehicles credit: Beginning in 2006 a credit is available for a variety of alternative fuel vehicles with the credit amount varying with fuel efficiency. This credit is limited to the first 60,000 vehicles sold, per car manufacturer, after January 1, 2006.

.

(Editor’s note: this article is for informational purposes only, and is not intended as tax advice. Please consult a qualified tax professional with questions about your own taxes.)

 
ABOUT THE AUTHOR
The KPBJ's picture
Status: Offline
Member Since: 2-17-2009
Post Count: 9230
Comments