Publication 553 - Highlights Of 2003 Tax Changes - Department Of The Treasury Page 14
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23environmental cleanup costs paid or incurred after Decem-
Qualified Zone
ber 31, 2003, as a current business expense. For more
Academy Bonds
information on environmental cleanup costs, see chapter 8
Scheduled To Expire
in Publication 535, Business Expenses.
State and local governments issue qualified zone acad-
Depreciation and
emy bonds to raise funds for the use of certain eligible
Section 179 Expense
public schools. The national qualified academy zone bond
limit for 2003 was $400 million, but is zero for 2004 (exclud-
ing any carryover limitation).
Extension of acquisition date. Property will meet the
At the time this publication was issued, Congress
!
was considering legislation that would establish a
“acquisition date test” for purposes of qualifying for the
national limitation amount for 2004. See What’s
30% special depreciation allowance (see chapter 3 of
CAUTION
Hot in Tax Forms, Pubs, and Other Tax Products at
Publication 946, How To Depreciate Property) if the prop-
to find out if this leg-
erty is acquired before January 1, 2005 (extended from
islation was enacted.
September 11, 2004).
Social Security and Medicare Taxes
Increased section 179 limits. The maximum section 179
deduction you can elect for property you place in service in
For 2004, the employer and employee will continue to pay:
2004 is increased from $100,000 to $102,000 for qualified
section 179 property ($137,000 for qualified zone property,
1) 6.2% each for social security tax (old-age, survivors,
qualified renewal property, or qualified New York Liberty
and disability insurance), and
Zone property). This limit is reduced by the amount by
2) 1.45% each for Medicare tax (hospital insurance).
which the cost of section 179 property placed in service
during the tax year exceeds $410,000 (increased from
Wage limits.
For social security tax, the maximum
$400,000). See chapter 2 of Publication 946.
amount of 2004 wages subject to the tax increases to
$87,900. For Medicare tax, all covered 2004 wages are
Work Opportunity Credit
subject to the tax. For information about these taxes, see
and Welfare-to-Work Credit
Circular E (Publication 15), Employer’s Tax Guide.
Scheduled to Expire
Self-Employment Tax
The work opportunity credit and the welfare-to-work credit
The self-employment tax rate on net earnings remains the
are scheduled to expire for wages paid to individuals who
same for 2004. This rate, 15.3%, is a total of 12.4% for
began working for you after 2003.
social security (old-age, survivors, and disability insur-
At the time this publication was issued, Congress
ance) and 2.9% for Medicare (hospital insurance).
!
was considering legislation that would allow
The maximum amount subject to the social security part
these credits with respect to employees who be-
for tax years beginning in 2004 increases to $87,900. All
CAUTION
gan work for you in 2004. See What’s Hot in Tax Forms,
net earnings of at least $400 are subject to the Medicare
Pubs, and Other Tax Products at
part.
spubs/index.html to find out if this legislation was en-
acted.
Other Changes
New York Liberty Zone
Business Employee Credit
Depreciation
Scheduled To Expire
Extension of time to claim the 30% special deprecia-
The New York Liberty Zone business employee credit is
tion allowance. You still may be eligible to claim the 30%
scheduled to expire for wages paid to qualified employees
special depreciation allowance for a tax year that included
for work performed after 2003.
September 11, 2001, if you meet the following require-
At the time this publication was issued, Congress
ments.
!
was considering legislation that would allow this
•
You timely filed your tax return for that tax year.
credit with respect to work performed by qualified
CAUTION
•
employees during 2004. See What’s Hot in Tax Forms,
You did not claim the 30% special depreciation al-
Pubs, and Other Tax Products at
lowance (or special Liberty Zone depreciation allow-
spubs/index.html to find out if this legislation was en-
ance) for qualified property (or qualified Liberty Zone
acted.
property) placed in service during that tax year.
Page 14
Chapter 2 Tax Changes for Businesses
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