There are several changes in the tax law that took effect Jan. 1, 2006, that may be of interest to you. Please check with your professional advisor to see how these changes may affect you.
Income Taxes:
The Internal Revenue Service has issued 2006 optional standard mileage rates used to calculate the deductible costs of operating a vehicle for business, charitable, medical or moving purposes. The standard mileage rates are now:
• 44.5 cents per mile for business miles driven
• .18 per mile driven for medical or moving purposes
• .14 per mile driven in service of charitable organizations, other than activities related to Hurricane Katrina relief
• .32 per mile for Hurricane Katrina-related relief work
Estate Taxes:
The amount exempted from estate taxes for 2006 is $2 million per person, up from $1.5 million per person in 2005.
Gift Taxes:
The gift tax exemption remains at $1 million per person over a lifetime.
Annual Exclusion:
Individuals can make annual gifts up to $12,000 per person without affecting their gift tax exemption. The recipient of the gift does not have to pay income taxes or gift taxes on the value of the gift. For example, a grandfather and grandmother with 10 grandchildren could each make 10 annual exclusion gifts. The total of the 20 gifts equals $240,000 during 2006.
For more information, contact Bea Sanford, Elon’s director of gift planning, at (336) 278-7454 or at bsanford@elon.edu.