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Ryan Highlights Top 10 Tax Changes as Tax Filing Deadline Nears WASHINGTON – During
this year’s tax return filing season, U.S. taxpayers will file more than 130
million tax returns. As the April
15 federal tax filing deadline approaches, Wisconsin’s First District
Congressman Paul Ryan released his “Top 10” list of tax changes for tax year
2003. “Many tax changes that result in savings to taxpayers
have taken effect over the past year,” Ryan said. “In Congress, we have
worked to lower the heavy tax burden, let families keep more of their money, and
make American businesses more competitive so they can grow and create jobs.
We still need to simplify our tax code, which is incredibly complex.
And we must guard against tax increases, which will happen if the tax
relief we passed is allowed to expire. In
the meantime, taxpayers can take advantage of the following tax changes as they
file their 2003 returns.” Reducing the
Tax Burden on Families 1. Reduction of
Individual Tax Rates and Expansion of 10 Percent Bracket:
Individual tax rates have been reduced (to 25%, 28%, 33%, and 35%) and,
instead of being subjected to higher tax rates, more of taxpayers’ income is
taxed at the lowest rate (10%), due to accelerated expansion of the ten percent
tax bracket. This lowers taxes for
taxpayers across-the-board. Furthermore,
most small business owners file taxes under the individual income tax rate
system. Lower individual rates help
these businesses grow and create jobs. 2. Marriage Penalty Tax Relief: The basic standard deduction for married taxpayers filing a joint return has been increased to twice the basic standard deduction amount for single returns. Additionally, the 15% tax bracket for married couples is increased to twice the bracket for singles. 3. Increase in the
Child Tax Credit: The child tax credit has been raised to $1,000 per child,
an increase of $400. Most taxpayers
using the credit received an advance payment of this increase during 2003 and
must subtract that advance when figuring their 2003 credit amount. Helping
Americans Save and Invest for Retirement 4. Increased Retirement Savings: Contributions to IRAs are increased from $2,000 to $3,000 and are indexed for inflation – allowing Americans to save more for retirement. Additionally, the limit on the amount that a person can contribute annually to a 401(k) or certain similar plans has been increased by $1,000 as well. 5. Reduction of Individual Capital Gains Rates: The 10% and 20% rates on net capital gains are reduced to 5% and 15%. The tax rate cut applies to sales and exchanges on or after May 6, 2003. 6. Dividend Tax Relief for Individuals: Qualified dividends will now be taxed at the same rate as capital gains, instead of the higher tax rate on ordinary income. The rates are reduced to 5% for taxpayers in the lowest tax brackets and to 15% for all other taxpayers. Helping Small Businesses Grow and
Create Jobs Besides the boost that lowering individual tax rates gives to small businesses, which create two out of every three new jobs in the U.S., the following provisions also help ease their tax burden: 7. Tax Relief to Help Businesses Survive, Grow and Create Jobs: Increased expensing for small businesses (increasing the amount that small businesses can immediately deduct) and an increase in bonus depreciation from 30 to 50 percent helps businesses succeed and create jobs. Assisting with Health, Education,
and Military Expenses 8. Increase in
Health Insurance Deductions for the Self-Employed: The deduction for health
insurance premiums for self-employed individuals has increased from 70% of the
cost of the policy to 100%. 9. Increase in the
Lifetime Learning Credit: Up to $10,000 of qualified tuition and higher
education expenses may be used to calculate the Lifetime Learning Credit,
doubling the maximum lifetime credit amount to $2,000.
The credit amount is now equal to 20 percent of the taxpayer’s first
$10,000 of out-of-pocket qualified tuition and related expenses. 10: Deduction for Overnight Travel Expenses of National Guard and Reserve Members: Qualified taxpayers may take an adjustment to income for non-reimbursed overnight travel expenses. |