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Some of the tax cuts in the Jobs and Growth Tax Relief
Reconciliation Act of 2003 will reach taxpayers without
any action on their part. For example, the IRS will
automatically figure the advance payments of the Child
Tax Credit increase that will be sent starting July 25
to most taxpayers who claimed this credit on their 2002
returns. And employers are using new tax withholding
tables, reflecting lower tax rates and a higher standard
deduction for married couples. But for self-employed
persons and those who have significant income from
capital gains or dividends, the way to get the tax
benefits this year may be to adjust their remaining 2003
estimated tax payments, due Sept. 15, 2003, and Jan. 15,
2004.
When using the worksheets with Form 1040-ES or
Publication 505, take these changes for individuals into
account:
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A higher standard deduction for married persons:
$9,500 for couples; $4,750 for those filing
separate returns.
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Tax rate reductions: the 10% rate applies to the
first $7,000 of taxable income for single
persons, $14,000 for married persons filing
jointly; the 15% rate for married couples covers
up to $56,800 of taxable income; and all rates
above 15% are lower. Use the new tax rate
schedules to figure your 2003 tax.
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Lower tax rates for long-term capital gains on
assets sold after May 5, 2003, and for qualified
2003 dividend income: 5% for those that would
have been taxed at a regular rate of 10% or 15%;
15% for most items that would have been taxed at
a higher rate. (But there are no changes in the
special rates that apply to unrecaptured section
1250 gain, collectibles gain, or section 1202
gain.)
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A higher alternative minimum tax exemption
amount: $40,250 for a single person or a head of
household; $58,000 for married persons filing
jointly and qualifying widow(er)s; and $29,000
for married persons filing separately.
Business owners should also consider changes to the
first-year depreciation allowance and the Section 179
expensing deduction.
You don’t have to wait until your 2003 return to
benefit from the tax cuts. Act now to bring the tax you
pay closer to the tax you owe.
Related Items:
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Form 1040-ES, Estimated Tax for Individuals ( PDF
49K)
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Pub. 505, Tax Withholding and Estimated Tax ( PDF
367K)
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