This is a brief list of selected limits which may be relevant in the quest to reduce your tax bill and maximize your wealth in 2006. Please comment if there are questions about or proposed additions to this list.

401k contributions

For 2006, the maximum 401k contribution is now $15,000. For individuals who turn 50 before the end of 2006, the law allows for an additional $5,000 to be contributed! This is called the “catch-up” limit.

IRA contributions

The maximum IRA contribution in 2006 remains at $4,000. Individuals who turn 50 before the end of 2006 can add another $1,000 under the catch-up limit. This applies to regular IRAs as well as Roth IRAs.

Income limits for contribution to a Roth IRA are as follows (in other words, if your income exceeds these levels, you cannot contribute to a Roth IRA):

$110,000 if you file as a single taxpayer
$160,000 if you are married filing jointly

Income limits for Traditional IRA deductibility

If you are covered by a retirement plan at work, you can take a deduction for traditional IRA contributions if your income does not exceed:

$60,000 for taxpayers filing as single or head of household
$85,000 for married filing jointly

Annual Gift Tax Exclusion

In 2006, you can give a gift of up to $12,000 (per gift recipient) to another individual without incurring any tax consequence to the giver or receiver. For instance, parents can gift a maximum of $12,000 to each of their children without the parents or children having to pay tax on the gift.

Child Tax Credit

The maximum credit remains at $1,000 per child for 2006, subject to the following income limits (i.e. the credit is not available if your adjusted gross income exceeds these levels):

$110,000 if you are married filing jointly
$55,000 if you are married filing separately
$75,000 if you use another filing status