Publication 553 - Highlights Of 2003 Tax Changes - Department Of The Treasury (Page 3 of 23) in pdf

THEN your exemption

include in investment income when figuring the limit on

IF your filing status is ...

amount increased to ...

your investment interest deduction. For more information,

•

see chapter 3 of Publication 550.

Married filing jointly or

$58,000.

qualified widow(er)

•

Single or head of household

$40,250.

Standard Deduction

•

Married filing separately

$29,000.

Amount Increased

See the instructions for Form 6251 for more information on

The standard deduction for people who do not itemize

the alternative minimum tax.

deductions on Schedule A of Form 1040 is, in most cases,

higher for 2003 than it was for 2002. The amount depends

Income Limits for Education

on your filing status, whether you are 65 or older or blind,

and whether an exemption can be claimed for you by

Savings Bond Interest

another person. The 2003 Standard Deduction Tables are

Exclusion Increased

shown in Publication 501, Exemptions, Standard Deduc-

tion, and Filing Information.

Under an education savings bond program, you may be

able to exclude from income some or all of the interest

Married persons. In addition to the general increase in

earned on the bonds if you meet certain conditions. For

the standard deduction allowed for all filing statuses, the

2003, the amount of your interest exclusion is phased out

standard deduction for married persons filing a joint return

(gradually reduced) if your filing status is married filing

has increased to double the amount allowed to a single

jointly or qualifying widow(er) and your modified adjusted

person. Also, the standard deduction for a married person

gross income (MAGI) is between $87,750 and $117,750.

filing separately has increased to the same amount al-

You cannot take the deduction if your MAGI is $117,750 or

lowed to a single person.

more. For 2002, the limits that applied to you were $86,400

and $116,400.

Limit on Itemized

For all other filing statuses, your interest exclusion is

Deductions Increased

phased out if your MAGI is between $58,500 and $73,500.

You cannot take a deduction if your MAGI is $73,500 or

If your adjusted gross income is above a certain amount,

more. For 2002, the limits that applied to you were $57,600

you lose all or part of your itemized deductions. In 2003,

and $72,600. For more information, see chapter 10 in

this amount is increased to $139,500 ($69,750 if married

Publication 970, Tax Benefits for Education.

filing separately). In 2002, the amount was $137,300

($68,650 if married filing separately). For more information

Hope and Lifetime Learning Credits

and a worksheet to figure the amount you can deduct, see

the instructions for line 28 of Schedule A (Form 1040).

Beginning in 2003, the following changes apply to the

Hope and lifetime learning (education) credits. For more

Exemption Amount Increased

complete information, see chapters 2 and 3 in Publication

970, Tax Benefits for Education.

The amount you can deduct for each exemption increased

from $3,000 in 2002 to $3,050 in 2003.

You lose all or part of the benefit of your exemptions if

Income limits for credit reduction increased. If you are

your adjusted gross income is above a certain amount.

married and filing a joint return, the amount of your educa-

The amount at which the phaseout begins depends on

tion credit for 2003 is phased out (gradually reduced) if

your filing status. For 2003, the phaseout begins at

your modified adjusted gross income (MAGI) is between

$104,625 for married persons filing separately, $139,500

$83,000 and $103,000. You cannot claim an education

for single individuals, $174,400 for heads of household,

credit if your MAGI is $103,000 or more. This is an increase

and $209,250 for married persons filing jointly. If your

from the 2002 limits of $82,000 and $102,000. The limits

adjusted gross income is above the amount for your filing

for other filing statuses did not change.

status, use the Deduction for Exemptions Worksheet in the

Form 1040 instructions to figure the amount you can de-

Lifetime learning credit. Beginning in 2003, the amount

duct for exemptions.

of qualified education expenses you can take into account

in figuring the lifetime learning credit increases from

Alternative Minimum Tax (AMT)

$5,000 to $10,000. The credit will equal 20% of these

qualified expenses, with the maximum credit being $2,000.

Beginning in 2003, the exemption amounts for figuring the

alternative minimum tax (AMT) increased. The amount

Earned Income Credit Amounts

depends on your filing status.

Increased

The following paragraphs explain the changes to the credit

for 2003. For details, see Publication 596, Earned Income

Credit.

Chapter 1 Tax Changes for Individuals

Page 3

Publication 553 - Highlights Of 2003 Tax Changes - Department Of The Treasury Page 3

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