Financial Management Consultant Services
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The latest edition of the Fisken Fiscal Facts has been published. More Info
Providing internal financial management consultancies to Non Profit Organizations and consulting firms, plus short term financial management consultancies overseas.
Welcome to Fisken & Company
FISKEN FISCAL FACTS VOLUME 3
Dear Client/Colleague;
The purpose of this edition of the FISKEN FISCAL FACTS E-Mail is to let you know of Tax Law Changes for Tax Year 2005. Should you have any follow-up questions, please feel free to contact me by E-Mail or phone. My communication coordinates appear in the signature section below.
1) IRS increases business mileage rate. The IRS has recently announced that standard business mileage for use of a vehicle will be 40.5 cents per mile effective 1 January 2005. The standard business mileage rate for Tax Year 2004 was 37.5 cents per mile. This 3 cent per mile increase in the standard business mileage rate is primarily caused by the increased costs for gasoline and automobiles.
2) Social Security Wage Base increase. The Social Security Wage Base for Tax Year 2005 will rise to $90,000. For Tax Year 2004 the Social Security Wage Base was $87,900. The tax rate on employers and employees remains the same at 6.2% for the OASDI portion of Social Security and at 1.45% for the Medicare portion of Social Security. Please note that the OASDI portion of Social Security will be "capped" once the $90,000. ceiling is reached. However the Medicare portion of Social Security has NO "cap" . Therefore for an employee earning $100,000.; both the employer and employee would be subject to paying 1.45% on the full $100,000.
3) IRS increases the threshold for FUTA deposits. The IRS has recently announced that it will increase the minimum threshold for FUTA ( Federal Unemployment Tax Act) deposits. THIS IS A GOOD THING. Under the new rules effective 1 January 2005 employers are required to make a quarterly deposit for FUTA if the accumulated tax exceeds $500.(US). The deposit threshold for Tax Year 2004 was $100. That $100 .FUTA deposit threshold was established in Tax Year 1970. It is important to remember that Non Profit Organizations qualifying as Tax Exempt under IRS Code Section 501C3 are NOT required to participate in the FUTA system.
Increasing the FUTA deposit threshold from $100. to $500. should substantially reduce the FUTA administrative burden for employers with 8 employees or less.
Cordially,
Bernie Fisken
Bernard J. Fisken, President
Fisken & Company, Taxation and Financial Management Consultants
7437 Arlington Road
Bethesda, MD 20814
301-907-3173 Tel
301-907-6772 Fax
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