Do I need to file a return?
Personal exemptions
Standard deductions
Tax brackets
How to get a Social Security Number

Do I need to file a return?

To taxpayers who have faithfully filed tax returns for years, it may be surprising to find that they may not have to file. Generally, you do not need to file a federal tax return for 2005 if your income is under these amounts:

Single - and not claimed by someone else.	Under age 65:	$8,200
	65 or older:	9,450
Head of Household:	Under 65:	10,500
	65 or older:	11,750
Married filing jointly:	Under 65:	16,400
	One spouse 65 or older:	17,400
	Both 65 or older:	18,400
Married filing separately:	Any age:	3,200
Qualifying Widow (er) with qualifying dependent:	Under 65:	13,200
	65 or older:	14,250

However... you must file a return if you had self-employment income of $400 or more. Also, you should file a return even if your income is under these limits if you:

• Had income tax withheld on wages, pensions, retirement distributions or investment accounts.
• Are eligible for an earned income credit.
• Someone else (such as a parent) can claim you as a dependent

California Return filing requirements for 2005

On 12/31/05, My filing status was:	and  on 12/31/05, my age was(6):	California Gross Income Dependents 0 1 2 or More
Single or Head of Household	Under 65 65 or Older	13,085   22,152   28,952 17,435   24,235   29,675
Married filing jointly or Married filing separately(4)	Under 65 (both spouses) 65 or older (one spouse) 65 or older (both spouses)	26,170   35,237   42,037 30,520   37,320   42,760 34,870   41,670   47,110
Qualifying widower)	Under 65 65 or older	22,152   28,952 24,235    29,675
Dependent of another person Any filing status	Any age	More than your standard deduction (5)

Notes:

1. California gross income is all income you received in the form of money, goods, property, and services from all sources that are not exempt from tax. Gross income does not include any adjustments or deductions.
2. California adjusted gross income is your federal adjusted gross income from all sources reduced or increased by all California income adjustments.
3. See page 9 of the 540 Personal Income Tax Booklet.
4. The income of both spouses must be combined: both spouses may be required to file a return even if only one spouse had income over the amounts listed.
5. Use the California Standard Deduction Worksheet for Dependents on page 11 or page 17 to figure your standard deduction.
6. If your 65th birthday is on January l, 2006, you are considered to be age 65 on December 31, 2005.

Requirement for children With Investment Income

California law is the same as federal law for the income of children under age 14. For each child under age 14 who received more that $1,600 of investment income in 2005, complete Form 540 and form FTB 3800, Tax Computation for Children Under Age 14 with Investment Income, to figure the tax on a separate Form 540 for your child.

Note: If you qualify, you may elect to report your child's income of $8,000 or less (but not less that $800) on your return by completing form FTB 3803, Parents' Election to Report Child's Interest and Dividends. To make this election, your child's income must be only from interest and/or dividends.  

Other Situation When You Must File

If you owe any of the following taxes for 2005, you must file Form 540.
* Tax on a lump-sum distribution;
* Tax on a qualified retirement plan, including an individual retirement arrangement (IRA) or an Archer medical savings account (MSA)
* Tax for children under age 14 who have investment income greater that $1,600 (see paragraph above);
* Alternative minimum tax;
* Recapture taxes;
* Deferred tax on certain installment obligations: or
* tax on an accumulation distribution from a trust.

A copy of the 540 Personal Income Tax Booklet 2005 can be found at

http://www.ftb.ca.gov/forms/05_forms/05_540ins.pdf

A copy of the 540 Form can be found at

http://www.ftb.ca.gov/forms/05_forms/05_540.pdf?30895

There are other circumstances where you might be required to file, or it might be beneficial to file, so check with an Enrolled Agent to be sure.

To find an Enrolled Agent near you go to

http://csea.org/search.asp

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Personal exemptions

Personal exemptions for 2005 are $3,200 per person. You are entitled to claim one exemption apiece for yourself, your spouse if married, and each dependent you can claim. If someone else (such as your parent) claims you as a dependent, you cannot take an exemption for yourself.

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Standard deductions

The IRS excludes from your taxable income a specified amount of expenses, called a "standard deduction." If your actual expenses in the allowed categories total more than the standard deduction amount, you may deduct those actual expenses, which is called "itemizing." If your itemized deductions are less than the standard amount, you are better off to use the standard deduction.

Single:	$5,000
Head of household:	$7,300
Married filing jointly:	$10,000
Married filing separately:	$5,000
Qualified (widower):	$10,000

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Tax brackets

Income tax is based on your income after personal exemptions, standard or itemized deductions, and other adjustments are subtracted. A tax bracket is the rate at which the top of your income is taxed, but not all of it. Someone in a 33 percent tax bracket has part of their income taxed at 10,15, 25 and 28 percent, with only the highest portion at 33 percent. The tax bracket tells you how much you will have to pay in federal income tax on each additional dollar you make.

 

2005 Tax Rate Schedules

Schedule X — Single If taxable income is  over But not over The tax is: $0 $7,300 10% of the amount over $0 $7,300 $29,700 $730 plus 15% of the amount over 7,300 $29,700 $71,950 $4,090.00 plus 25% of the amount over 29,700 $71,950 $150,150 $14,652.50 plus 28% of the amount over 71,950 $150,150 $326,450 $36,548.50 plus 33% of the amount over 150,150 $326,450 no limit $94,727.50 plus 35% of the amount over 326,450 Schedule Y-1 — Married Filing Jointly or Qualifying Widow(er) If taxable income is over But not over The tax is: $0 $14,600 10% of the amount over $0 $14,600 $59,400 $1,460.00 plus 15% of the amount over 14,600 $59,400 $119,950 $8,180 plus 25% of the amount over 59,400 $119,950 $182,800 $23,317.50 plus 28% of the amount over 119,950 $182,800 $326,450 $40,915.50 plus 33% of the amount over 182,800 $326,450 no limit $88,320.00 plus 35% of the amount over 326,450 Schedule Y-2 — Married Filing Separately If taxable income is over But not over The tax is: $0 $7,300 10% of the amount over $0 $7,300 $29,700 $730 plus 15% of the amount over 7,300 $29,700 $59,975 $4,090 plus 25% of the amount over 29,700 $59,975 $91,400 $11,658.75 plus 28% of the amount over 59,975 $91,400 $163,225 $20,457.75 plus 33% of the amount over 91,400 $163,225 no limit $44,160.00 plus 35% of the amount over 163,225 Schedule Z — Head of Household If taxable income is over But not over The tax is: $0 $10,450 10% of the amount over $0 $10,450 $39,800 $1,045 plus 15% of the amount over 10,450 $39,800 $102,800 $5,447.50 plus 25% of the amount over 39,800 $102,800 $166,450 $21,197.50 plus 28% of the amount over 102,800 $166,450 $326,450 $39,019.50 plus 33% of the amount over 166,450 $326,450 no limit $91,819.50 plus 35% of the amount over 326,450

The federal Form 1040 actually collects several other taxes including:

• Self employment (Social Security and Medicare) tax
  
• Social Security and Medicare tax on tip income
  
• Early withdrawal tax on IRA's and retirement plans
  
• Household employee payroll tax ("nanny tax")
  
• Alternative minimum tax

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How to get a Social Security Number

Every taxpayer, dependent and person on which an Earned Income Credit is based must have a Social Security number. (Individuals such as foreign citizens who are not eligible to get a Social Security number can be issued an Individual Tax Identification Number, or "ITIN.")

Social Security numbers are issued by the Social Security Administration, not the IRS. To apply for a Social Security number, fill out a Form SS-5 and take it with original documents for identification to your nearest Social Security office. (You may mail the application, but that is not recommended because of risk of losing the documents you must send).

For the nearest Social Security office, check the Yellow Pages. The Social Security Administration can be reached:

• By telephone: 1-800-772-1213
• Website: www.ssa.gov

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