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Taxes: What’s New for 2005

Tax time is here again. It’s not crunch time yet, but for many business owners, the process of preparing tax returns have started. I am still awaiting for several 1099s from several organizations before I get into one of my least liked activities – tax preparations.

So what are the tax changes in 2005 that small businesses need to know? Here are the major ones that affect entrepreneurs:

• Small business owners can avail of the new 401(K) Roth that allows contributions of $14,000 out of profit (plus $4,000 catch up for those over 50)
• IRAs increase from $3,000 to $4,000 (plus $500 catch up for those over 50)
• Increase of health insurance deduction for self-employed individuals from 70% in 2004 to up to 100% in 2005
• Increase of vehicle mileage from 37.5 cents per mile to 40.5 cents per mile from JanuaRY 1 to August 31, and 48.5 cents per mile from September 1 to Dcember 31