Publication 553 - Highlights Of 2003 Tax Changes - Department Of The Treasury (Page 4 of 23) in pdf

Earned income amount is more. The maximum amount

whether you have qualifying expenses. See Publication

of income you can earn and still get the credit has in-

968, Tax Benefits for Adoption, for more information.

creased. You may be able to take the credit if:

•

Health Coverage Tax Credit

You have more than one qualifying child and you

earned less than $33,692 ($34,692 if married filing

You may be able to claim a new credit for health insurance

jointly),

premiums you paid in 2003 if:

•

You have one qualifying child and you earned less

1) You are a worker whose job was displaced by for-

than $29,666 ($30,666 if married filing jointly), or

eign trade, or

•

You do not have a qualifying child and you earned

2) You receive a pension from the Pension Benefit

less than $11,230 ($12,230 if married filing jointly).

Guaranty Corporation.

Your adjusted gross income also must be less than the

The credit is available to eligible individuals for qualifying

amount in the above list that applies to you.

payments made for each month in 2003. For more informa-

tion, see Health Coverage Tax Credit in Publication 502,

Investment income amount is more. The maximum

Medical and Dental Expenses, and Form 8885, Health

amount of investment income you can have and still get

Coverage Tax Credit.

the credit has increased to $2,600.

Tax Benefits for

Child and Dependent

Members of the Military

Care Credit Increased

The Military Family Tax Relief Act of 2003 and the Ser-

Beginning in 2003, the following changes apply to the child

vicemembers Civil Relief Act provide the following tax

and dependent care credit. For details, see Publication

benefits for members of the Armed Forces and their fami-

503, Child and Dependent Care Expenses.

lies. For more information, see Publication 3, Armed

Credit percentage. The credit can be as much as 35%

Forces’ Tax Guide.

(increased from 30% in 2002) of your qualified expenses.

Death gratuity payments. The death gratuity paid to a

Income that qualifies for the highest percentage. The

survivor of a member of the Armed Forces who died after

maximum adjusted gross income amount that qualifies for

September 10, 2001, increased to $12,000 and is nontax-

the highest credit percentage increased to $15,000. Previ-

able. Previously, the death gratuity was $6,000 and only

ously, this amount was $10,000.

$3,000 of it was nontaxable. You may be able to claim a

refund if you paid tax on a death gratuity you received

Dollar limit. The limit on the amount of qualifying ex-

because of a death that occurred after September 10,

penses increased to $3,000 for one qualifying individual

2001.

and to $6,000 for two or more qualifying individuals. Previ-

Military base realignment and closure benefit. A mili-

ously, these amounts were $2,400 and $4,800, respec-

tary base realignment and closure benefit generally is

tively.

nontaxable if paid to you after November 10, 2003.

Earned income amount for nonworking spouse. If your

Dependent-care assistance program. Benefits you re-

spouse is either a full-time student or not able to care for

ceived after 2002 under a dependent-care assistance pro-

himself or herself, the amount of income he or she is

gram are nontaxable.

treated as having earned increased to $250 a month if

there is one qualifying person and to $500 a month if there

Extension of deadlines expanded to include contin-

are two or more qualifying persons. Previously, these

gency operations. The extension of the deadline for filing

amounts were $200 and $400, respectively.

a return for members of the Armed Forces serving in a

combat zone now also applies to members of the Armed

Child Tax Credit

Forces serving in a contingency operation.

Deferring payment of income tax. As a member of the

For 2003, the maximum child tax credit increased to

Armed Forces, you may be able to defer (delay) payment

$1,000 for each qualifying child. But you must reduce your

of income tax that becomes due before or during your

credit by any advance payment you received in 2003. For

military service for up to 180 days after termination or

details, see Publication 972, Child Tax Credit.

release from service.

Adoption Benefits Increased

Sale of a home. If you have been a member of the

uniformed services or Foreign Service, you now may be

Beginning in 2003, the maximum adoption credit increased

able to exclude from income a gain from selling your main

to $10,160. Also, the exclusion from income of benefits

home, even if you did not live in it for the required 2 years

under your employer’s adoption assistance program in-

during the 5-year period ending on the date of sale. You

creased to $10,160. You will be allowed these amounts for

can choose to have the 5-year test period for ownership

the adoption of a child with special needs regardless of

and use suspended during any period you or your spouse

Page 4

Chapter 1 Tax Changes for Individuals

Publication 553 - Highlights Of 2003 Tax Changes - Department Of The Treasury Page 4

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