Take these tax law changes and new cost of living adjustments
into account as you begin your 2003 tax planning.
Take these tax law changes and new cost of living adjustments into account as you begin your 2003 tax planning:
Effective Jan. 1, the standard mileage rate for business driving decreases from 36.5 cents to 36 cents per mile. The rate for medical and moving mileage decreases from 13 cents to 12 cents per mile. The rate for charitable mileage is unchanged at 14 cents per mile.
Self-employed individuals can deduct 100 percent of their health insurance premiums this year, up from 70 percent in 2002.
The maximum earnings subject to Social Security tax increases from $84,900 to $87,000. As before, all earned income is subject to Medicare tax.
The earnings limit for retirees under age 65 increases from $11,280 to $11,520. Social Security benefits will be reduced $1 for every $2 in earnings above this limit.
The prior-year safe harbor percentage for estimated tax payments required of taxpayers with an adjusted gross income in excess of $150,000 decreases from 112 percent to 110 percent.
The maximum child care credit increases from 30 percent to 35 percent. The eligible expense limit increases from $2,400 to $3,000 for one child and from $4,800 to $6,000 for two or more children.
The maximum individual retirement account (IRA) contribution is unchanged at $3,000 ($3,500 for taxpayers 50 and older).
The maximum amount of wages employees can put into a 401(k) plan increases from $11,000 to $12,000. The maximum allowed for SIMPLE plans increases from $7,000 to $8,000. If you are 50 or older, you can contribute up to $14,000 to a 401(k) and $9,000 to a SIMPLE plan.
The estate tax exemption remains at $1 million, but the top estate tax rate drops from 50 percent to 49 percent.
In addition to the changes above, tax brackets, personal exemptions and other tax numbers increase due to required annual inflation adjustments.
For details on 2003 tax changes or for planning assistance, call us.
Kris Nolan is a CPA with the accounting and business consulting firm of Bianchi, Lorincz & Co. in downtown Hollister and in Morgan Hill.
