WFTRA.

• Author: Laffie, Lesli S.
• Position: Working Families Tax Relief Act of 2004

On Oct. 4, 2004, President Bush signed into law the Working Families Tax Relief Act of 2004 (WFTRA). Some of the critical non technical-corrections tax changes include:

* Under WFTRA Section 101(a), amending Sec. 24(a), for tax years beginning in 2005-2009, the child tax credit increases to $1,000.

* For tax years beginning in 2005-2008, the basic standard deduction for married filing jointly (MFJ) doubles to that of single fliers, under WFTRA Section 101(b), amending Sec. 63(c)(2).

* Under WFTRA Section 101(a), amending Sec. 1(f)(8), for tax years beginning in 2005-2007, the 15% MFJ bracket's endpoint increases to twice that for single filers.

* For 2005-2010, under WFTRA Section 101(d), amending Sec. 1(i)(1), the 10% bracket will apply to the first (1) $7,000 of taxable income for single filers and those married filing separately (MFS); (2) $14,000 of taxable income for MFJ fliers and surviving spouses; and (3) $10,000 of taxable income for heads of households (HOHs). Al1 taxable income levels are indexed from 2003.

* According to WFTRA Section 103, amending Sec. 55 (d)(1), for tax years beginning in 2005, the alternative minimum tax (AMT) exemption for individuals increases to $58,000 for MFJ, $29,000 for MFS and $40,250 for single fliers.

* For tax years beginning in 2004 and 2005, under WFTRA Section 312(a), amending Sec. 26(a)(2), the combined total of nonrefundable personal credits is limited to (1) regular tax liability reduced by the foreign tax credit allowable under Sec. 27(a) plus (2) the AMT.

* For tax years beginning after 2004, WFTRA Sections 201, 204(a)(1), 205(a), 203(b) and 202(a), amending, respectively, Secs. 152(c), 24(c)(1), 32(c)(3)(A), 21(b)(1)(A) and 2(b)(1)(A)(i), establish a uniform definition of "qualifying child" for purposes of the dependency exemption, the child credit, the earned income credit, the dependent care credit and HOH filing status.

* WFTRA Section 301 extends the Sec. 41 research credit to amounts paid or incurred after June 30, 2004 and before 2006.

* Under WFTRA Section 303(a), amending Sees. 51(c)(4) and 51A(f), both the work opportunity credit and the welfare-to-work credit extend to...