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Year End Planning
As we come to the end of another year,
it is time to plan our 2003 income tax. It will be too late to make
most changes after December 31st. Here are the major changes that
have happened this year:
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The general tax rates have been
lowered. For example, a married couple with three dependent
children and earning $50,000 owed $1,669 of tax in 2002. In 2003
the same taxpayer would owe $5 of tax.
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The standard deduction is now $9,700
for joint returns and $4,850 for separate returns. If your
itemized deductions will exceed these amounts you may wish to accelerate
your payments for taxes, medical and contributions in order to maximize
your deduction. If your itemized deductions will be less than
these amounts, you will probably be better off deferring these payments
until next year.
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The maximum tax rate for long-term
capital gains and dividends received from domestic corporations have
been lowered to 15% for upper income taxpayers and 5% for joint
taxpayers with taxable income of less than $58,101 and single taxpayers
with taxable income less than $29,051. If you are a shareholder in
your own closely held regular corporation, you should consider paying
dividends this year.
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Businesses may now expense up to
$100,000 of the cost of equipment purchased during the year. There
are limitations based on the income of the business and the taxpayer.
In addition, there is 50% bonus depreciation available for new
equipment purchased this year. Call our offices to help plan these
year-end purchases to maximize your deductions.
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If you are not sure if you are
eligible to contribute to an IRA, you have until April 15th to make your
contribution. Wait until we prepare your return to determine how
much you may contribute.
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Members of the National Guard and
Reserves who are 100 miles from home are allowed a new abobe-the-line
deduction this year for expenses paid or incurred in the performance of
their service in the military.
Contact our office for more information
about your year-end planning. (December, 2003 Newsletter)
James E. Newland, CPA
939 Center Road
Eastlake, Ohio 44095
440-951-9799
Service@NewlandCPA.com
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