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A sampling of answers
to questions that our clients ask about tax matters
- business and personal.
Business Tax
FAQ
| Q |
What is
the wage limit for Social Security taxes? |
| A |
For 2003, a taxpayer
must pay social security tax on wages up to $87,000.
For 2002 the limit is $84,900. |
| Q |
What is
the wage limit for Medicare taxes? |
| A |
There is no limit.
Medicare taxes must be paid on 100% of wages. |
| Q |
How much
is self-employment tax? |
| A |
Self-employment
tax is 15.3% on net earnings from self-employment.
The rate consists of 12.4% for old-age, survivors
and disability insurance (OASDI) and 2.9% for
Medicare. The OASDI rate applies to net earnings
up to $84,900 for 2002, and $89,000 for 2003.
The good news is that half (50%) of self-employment
taxes are deductible from total revenue. |
| Q |
What is
the federal mileage rate? |
| A |
For 2003 the mileage
rate is $0.36 per mile. |
| Q |
Do self-employed
individuals have to make estimated tax payments? |
| A |
Yes. If you do
not have sufficient withholding to pay your tax
liability, the Internal Revenue Service (IRS)
expects you to pay your liability with installment
payments, as you earn the income. |
| Q |
What are
the due dates on estimated tax payments? |
| A |
For calendar-year
taxpayers, the estimates are due as follows:
| Individuals
and Trusts |
Corporations |
#1
- April 15
#2 - June 15
#3 - September 15
#4 - January 15
|
#1
- April 15
#2 - June 15
#3 - September 15
#4 - December 15 |
|
| Q |
What happens
if I do not make my estimated tax payments? |
| A |
The IRS assesses
a penalty on all estimated tax payments that are
made late. A tax payment is considered late if
it is: not made at all (until date of filing return)
or if it is made beyond the due dates. |
| Q |
When does
an employer have to make a Federal Unemployment
deposit? |
| A |
If, at the end
of a calendar quarter, the employer owes more
than $100 in undeposited federal unemployment
tax, then the tax owed must be deposited by the
end of the next month. |
Personal Tax
FAQ
| Q |
How much
is the standard deduction? |
| A |
| The
standard deductions are as follows: |
2001 |
2002 |
2003 |
| Married filing
join |
$7,600 |
$7,850 |
$7,950 |
| Surviving
spouse |
$7,600 |
$7,850 |
$7,950 |
| Head of household |
$6,650 |
$6,900 |
$7,000 |
| Single |
$4,550 |
$4,700 |
$4,750 |
| Married
filing separate |
$3,800 |
$3,925 |
$3,975 |
|
| Q |
How much
is the personal exemption? |
| A |
For 2003 the personal
exemption is $3.050; $3,000 for 2002. |
| Q |
What is
the maximum I can put in my IRA? |
| A |
An individual can
contribute up to $3,000 (50 and over catch-up=
$500) to an IRA subject to some restrictions based
on income and whether you are eligible to participate
in a qualified retirement plan. |
| Q |
What is
the maximum I can put in my IRA? |
| A |
Your IRA contribution
must be made before you file your individual tax
return or by April 15. For example, if you complete
and mail your 2002 tax return on March 3, 2003
for your 2002 tax return, you must make your IRA
contribution by April 15. You do not get an extension
on the due date of the IRA contribution. |
| Q |
What is
the maximum I can put in my IRA? |
| A |
Your IRA contribution
must be made before you file your individual tax
return or by April 15. For example, if you complete
and mail your 2002 tax return on March 3, 2003
for your 2002 tax return, you must make your IRA
contribution by April 15. You do not get an extension
on the due date of the IRA contribution. |
| Q |
Do I have
to pay tax on a gift I received? |
| A |
No, gifts are not
taxable to the recipient. In certain situations,
gifts can be taxable to the giver. |
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