FEDERAL TAXES Cheneys' income far above Bushes'

The Cheneys' adjusted gross income for 2005 was nearly $8.82 million.
WASHINGTON POST
WASHINGTON -- President Bush and first lady Laura Bush paid $187,768 in federal income taxes on taxable income of $618,694 in 2005, the White House said Friday.
Vice President Dick Cheney and his wife, Lynne, reported considerably larger sums in all categories. They also have a big refund check -- of nearly $2 million -- on the way, reflecting the complexities of how the Cheneys have distributed their tax burden and withholding in recent years.
In the Bushes' case, the numbers were down a bit from last year, when they paid $207,307 in federal taxes on taxable income of $672,788.
The Bushes' income included the president's $400,000 annual salary along with the investment income from trusts in which their assets are held, for an overall adjusted gross income of $735,180 in 2005. Their adjusted gross income was $784,219 in 2004.
In both years they gave roughly 10 percent of their income to charitable organizations -- $77,785 in 2004 to $75,560 last year.
The Cheneys owed $529,636 in federal taxes on $1.96 million in taxable income in 2005, according to their tax return, released by the White House.
Their overall income included the vice president's annual salary of $205,031 and $211,465 in deferred compensation from Halliburton Co., the Texas-based energy services firm and defense contractor that he headed until August 2000.
Other income
Before leaving Halliburton, a large military contractor in Iraq, Cheney chose to defer his 1999 salary as chief executive officer and have it paid to him, with interest, in fixed annual installments over five years after his retirement from the company.
Because the Cheneys exercised stock options and earned royalties from books written by Lynne Cheney last year, the couple's adjusted gross income for 2005 was nearly $8.82 million. They donated much of the money from those sources -- about $6.87 million -- to charitable organizations.
All that charitable giving reduced their taxable income considerably, entitling the couple to a tax refund of $1.94 million, since they had paid $2.46 million in withholding and estimated taxes during 2005, according to the White House.
The Cheneys appear to have taken advantage of a special tax break passed by Congress in the Katrina Emergency Tax Relief Act of 2005, said Steve Hurok, tax director at BDO Seidman LLP, a national tax consulting and professional services firm.
The provision temporarily suspended a federal rule that prevents people from taking tax deductions on cash charitable giving that exceeds 50 percent of their adjusted gross income.
That change, which expired at the end of the year, allowed the Cheneys to deduct from their taxable income the full $6.8 million of their charitable giving last year, rather than the $4.4 million that normally would have been eligible, Hurok said.
In essence, the Cheneys were able to donate the extra $2.4 million to charity without having to pay taxes on the money or defer the tax benefits to future years.