TAX UPDATE

2007 California UI and SDI rates

The SDI rate for 2007 is .8%.  The taxable wage limit is $86,698 for each employee per calendar year.  The maximum amount to withhold is $693.58.

Social Security updates

The social security taxable wage limit increases to $102,000 for 2008 (rates remain 6.2% OASDI and 1.45% Medicare with no wage cap).  2007 limit was $97,500.

2007 standard mileage rate

The IRS announced standard mileage rates for mileage driven beginning January 1, 2008, and California conforms to these rates.  The standard mileage rates for use of a car (including vans, pickup trucks or panel trucks) are:

2008 Maximum Contributions to Retirement Plans

IRAs (regular and Roth)

Up to age 50       $5000   ($4000 in 2007)

Age 50+                $6000   ($5000 in 2007)

401(k); 403(b); 457 plans

Up to age 50       $15,500

Age 50+                $20,500

Simple IRAs

Up to age 50       $10,500

Age 50+                $13,000

Defined Contribution Plans

Profit Sharing/Money Purchase        $45,000

SEP IRA                                                 $45,000

Year End Tips for Self-Employed

Buy equipment  (Section 179 expensing limit $128,000 for 2008)

Pay all expenses if on a cash basis

Set up a retirement plan

Organize your records

Look into a Home Office deduction

Consider employing spouse and deducting health insurance