For details on the changes for 2005 and 2006 see Pub. 553.

Qualifying child—New definition. A new definition of a qualifying child applies for each of the following tax benefits.

• Dependency exemption (line 6c).
• Child tax credits (lines 52 and 68).
• Head of household filing status (line 4).
• Credit for child and dependent care expenses (line 48).
• Earned income credit (EIC) (lines 66a and 66b).

See the instructions for each of these benefits for details.

Foster child—New rules. New rules apply to determine who is a foster child and when a foster child can be used to claim certain tax benefits. To claim a foster child as a qualifying child for any of the tax benefits listed above, the child must be placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction. A foster child no longer qualifies you to use qualify- ing widow(er) filing status.

Dependents cannot claim exemptions for dependents. If you can be claimed as a dependent on someone else’s return, you cannot claim any exemptions for dependents.

Emergency tax relief was enacted as a result of Hurricane Katrina. The tax benefits provided by this relief include the following.

• Suspended limits for certain personal casualty losses and cash contributions.
• An additional exemption amount if you provided housing for a person displaced by Hurricane Katrina.
• Election to use your 2004 earned income to figure your 2005 EIC and additional child tax credit.
• Increased charitable standard mileage rate for using your vehicle for volunteer work related to Hurricane Katrina.
• Special rules for time and support tests for people who were temporarily relocated because of Hurricane Katrina.
• Special rules for withdrawals and loans from IRAs and other qualified retirement plans.

For more details on these and other tax benefits related to Hurricane Katrina, see Pub. 4492.

Domestic production activities deduction. You may be able to deduct up to 3% your qualified production activities income from certain business activities. See the instructions for line 35 on page 35.

IRA deduction expanded. You and your spouse, if filing jointly, may each be able deduct up to $4,000 ($4,500 if age 50 older at the end of 2005). You may be able to take an IRA deduction if you were covered by a retirement plan and your modified adjusted gross income (AGI) is less than $60,000 ($80,000 if married filing jointly or qualifying widow(er)). See the instructions for line 32 on page 31.

Earned income credit (EIC). You may be able to take the EIC if:

• A child lived with you and you earned less than $35,263 ($37,263 if married filing jointly), or
• A child did not live with you and you earned less than $11,750 ($13,750 if married filing jointly).

See the instructions for lines 66a and 66b that begin on page 45.

Standard mileage rates. The 2005 rate for business use of your vehicle is 401/2 cents a mile (481/2 cents after August 31, 2005). The 2005 rate for use of your vehicle to get medical care or to move is 15 cents a mile (22 cents a mile after August 31, 2005).

Elective salary deferrals. The maximum amount you can defer under all plans is generally limited to $14,000 ($10,000 if you only have SIMPLE plans; $17,000 for section 403(b) plans if you qualify for the 15-year rule). The catch-up contribution limit increased to $4,000 ($2,000 for SIMPLE plans). See the instructions for line 7 on page 22.

Certain deductions reordered. The lines in the Adjusted Gross Income section have been reordered to simplify the computation of modified adjusted gross income limits.

Mailing your return.You may be mailing your return to a different address this year because the IRS has changed the filing location for several areas. If you received an envelope with your tax package, please use it. Otherwise, see Where Do You File? on the back cover.

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