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October 3, 2005
Important tax law changes for 2005
The IRS mileage rate increases to 48.5 cents per mile for September through December 2005. The medical and moving rate moves to 22 cents per mile for the same four months.
Most employers will continue reimbursing 40.5 cents creating an 8 cent per mile shortfall available as a 2% miscellaneous itemized deduction for individuals.
Hurricane Katrina related:
If you are displaced from the region affected by Hurricane Katrina you may be entitled to many specific tax breaks, see us for more details.
If you are a business and donate items you can find them much more advantageous than under past tax law. Donations through December 31, 2005 will only apply. If you are an employer and hire a displaced person they may qualify for a worker credit. You must hire them between August 27 and December 31, 2005.
Individuals or families who take in displaced people may deduct up to $500 per person, excluding spouses and dependents up to a maximum of $2000. Rent cannot be charged.
Charitable driving for Katrina related efforts is deductible at 34 cents per documented mile. This applies through the year 2006.
There are incentives for businesses that build or locate in the disaster area, see us.
Lawrence R. Yoder, CPA
Tax Advice Disclosure: To ensure compliance with requirements imposed by the IRS under Circular 230 we inform you that any U.S. federal tax advice contained in this communication (including any attachments), unless specifically stated was not intended and cannot be used for the purpose of avoiding penalties under the Internal Revenue Code and or promoting, marketing or recommending to another party any matters addressed herein.