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Groen, Kluka & Company, P.C. Reminds You of Personal Tax Law Changes for Your 2003 Tax Return

TROY, Michigan - January 23, 2004 - Groen, Kluka & Company, P.C., a full-service professional accounting, financial services and management consulting firm headquartered in Troy, Mich. wants to remind all Michigan residents of tax cuts that affect them as part of the 2003 Jobs and Growth Act signed into law by President George Bush.

Each of these tax laws is now in place as individual taxpayers are in the process of preparing their 2003 tax returns before the April 15, 2004 deadline.

Tax Rate Changes:

• The 10% tax rate bracket for most filing statuses is expanded.
• The 15% tax rate bracket for married taxpayers filing jointly is expanded.
• The 27%, 30%, 35% and 38.6% tax rates are reduced to 25%, 28%, 33%, and 35% respectively.

The child tax credit has increased to up to $1,000 for each qualifying child.

The standard deduction for married taxpayers has increased to $9,500, which is now double the standard deduction for a single taxpayer, thereby eliminating the "Marriage Penalty."

The amount of qualified tuition and related expenses you make take into account in figuring your lifetime learning credit increased from $5,000 to $10,000. The credit equals 20% of these qualified expenses, with the maximum credit being $2,000.

New Capital Gains Rates:

• For gains after May 5, 2003, the 10% capital gain rate is reduced to 5% and the 20% capital gain rate is reduced to 15%.

Child and Dependant Care Credit Changes:

• The credit can now be as much as 35% (previously 30%) of your qualified expenses.
• The limit on the amount of qualifying expenses increased to $3,000 for one qualifying individual and $6,000 for two or more for qualifying individuals.

Exemption amount changes: Individual taxpayers are allowed a $3,050 deduction for each exemption to which that individual is entitled.

Dividends taxed at new tax rate

• After December 31, 2002, qualified dividends are taxed at the new capital gains rates. The maximum tax for qualified dividends is 15% (generally 5% for people whose other income is taxed at the 10% or 15% rate).

These are examples of tax law changes covered under the 2003 Jobs and Growth Act that are likely to affect the most people. There are many other tax law changes that directly affect businesses not listed here. The tax professionals at Groen, Kluka & Company, P.C. can help you sort through all the options and details available to each individual or business.