December 2003 

Dear Client, 

There was new tax legislation passed in 2003 and this year some additional credits and deductions from previous tax legislation go into effect.  Significant aspects of the tax provisions effective for 2003 are provided here for your information. 

The amount of income subject to the lower tax rate, 10%, has been expanded and tax rates have been decreased by 2% in the upper tax rates.  Dividend income will be taxed at a maximum rate of 15%. Long-term capital gains after May 6, 2003 will also be taxed at a maximum rate of 15%.  The child tax credit has been increased from $600 to $1000 for 2003 and 2004. 

For 2003, self-employed individuals can deduct 100% of the amount paid for health insurance premiums, up from 70% in 2002.

 In 2003, the standard mileage rate for business travel is 36 cents per mile.  The rate for medical mileage is 12 cents per mile and charitable mileage is 14 cents per mile.  For 2004, the business mileage rate increases to 37.5 cents per mile, medical mileage increases to 14 cents per mile and charitable mileage remains at 14 cents per mile. 

For 2003, taxpayers can deduct up to $3,000 of qualified higher education tuition and related expenses.  This deduction is also available even if you don’t itemize.  This deduction is phased out for joint taxpayers with income over $130,000 and single taxpayers with income over $65,000.

 Up to $2,500 in student loan interest is deductible on 2003 returns.  This deduction is phased out for joint taxpayers with income over $130,000 and single taxpayers with income over $65,000. 

 There is a deduction for teachers who can now deduct up to $250 for classroom materials that are not reimbursed.  This deduction is available even if you don’t itemize. 

My office offers a full range of tax services including free electronic filing of Federal and State income tax returns.  Direct deposit of tax refunds is available for taxpayers filing either electronic or paper returns.  

Please call my office if you have questions about your tax situation or need assistance with tax planning.  You are also encouraged to send me e-mail at michelle@mbcpa.com.  Lastly, in response to your inquiries, I always welcome new business from good clients like yourself. 

Best wishes for a happy and prosperous New Year. 

Sincerely, 

Michelle M. Biess, CPA