Tax Tips - 2003

INCLUDED IN INCOME
wages salary fees tips commissions business profits gain on sale of real estate, securities, and other property interest received rents collected dividends royalties alimony and separate- maintenance payments	sick pay annuities and pensions, to the extent the return exceeds investment income from an interest in an estate or trust prizes and awards some fringe benefits up to 85% of social security benefits gambling winnings net of losses strike benefits unemployment compensation hobby income barter income illegal income

NOT INCLUDED IN INCOME

gifts and inheritances
interest from certain state and municipal bonds (or received by mutual funds that hold them)
employer reimbursements for business expenses (that you don't deduct)
returns of capital gain up to $500,000 on sale of primary residence (under certain conditions)
some or all of Social Security benefits
employer-paid health coverage for immediate family
compensation for sickness or injury
child support

welfare
accident-and health-insurance proceeds
life-insurance proceeds (estate tax may apply)
veterans benefits
scholarships and fellowships to a degree candidate if used for certain purposes
14 days' rental income from house or vacation home
interest on Education Savings Bonds
dependent-child wages up to $3,000
child's investment income up to $750
federal income-tax refunds

2004 INCOME TAX RATES

	Taxable Income	Tax Rate (%)	Total Tax at Breakpoint	Phase-out Range of Personal Exemptions
Married, Filing Jointly	0 - 14,300 14,301 - 58,100 58,101 - 117,250 117,251 - 178,650 178,651 - 319,100 319,101 and up	10 15 25 28 33 35	1,430.00 8,000.00 22,787.50 39,979.50 86,328.00	$ 214,050 - 336,550
Head of Household	0 - 10,200 10,201 - 38,900 38,901 - 100,500 100,501 - 162,700 162,701 - 319,100 319,101 and up	10 15 25 28 33 35	1,020.00 5,325.00 20,725.00 37,141.00 89,753.00	$ 178,350 - 300,850
Single	0 - 7,150 7,151 - 29,050 29,051 - 70,350 70,351 - 146,750 146,751 - 319,100 319,101 and up	10 15 25 28 33 35	715.00 4,000.00 14,325.00 35,717.00 92,592.50	$ 142,700 - 265,200
Married, Filing Separately	0 - 7,150 7,151 - 29,050 29,051 - 58,625 58,626 - 89,325 89,326 - 159,550 159,551 and up	10 15 25 28 33 35	715.00 4,000.00 11,393.75 19,989.75 43,164.00	$ 107,025 - 168,275
Estates & Trusts	0 - 1,950 1,951 - 4,600 4,601 - 7,000 7,001 - 9,550 9,551 and up	15 25 28 33 35	292.50 955.00 1,627.00 2,468.00

2004 STANDARD DEDUCTION
	Under Age 65		Age 65 or Over
Married, Filing Jointly	$	9,700	10,650 (one spouse 65 or older) 11,600 (both spouses 65 or older)	Standard deduction for an individual claimed as a dependent by another cannot exceed the greater of $800 or the dependent's earned income + $250, up to the normal standard deduction. If one spouse filing separately itemizes, the other gets no standard deduction.
Head of Household	$	7,150	8,350
Unmarried Individuals	$	4,850	6,050
Married, Filing Separately	$	4,850	5,800
Blind taxpayers get an extra $950 if married, $1,200 if single.
CREDITS

Earned-Income Credit		The credit is "refundable" - even someone who owes no taxes can claim a "refund". It helps low-income workers age 25 and above, by offsetting the impact of payroll taxes. Those with two or more children reap the largest benefits. Major abuses have the IRS examining claims for this credit closely.

Child and Dependent Care		For care for your child under age 13 or disabled dependent while you work: 35% of up to $3,000 for one child or up to $6,000 for more than one. Phaseout of the credit starts at $15,000 AGI and gradually drops to 20%.

Elderly Disabled		Credit is 15% of qualifying income; available to permanently disabled age 65 and over.