Change

Details

Accelerated the tax rates of 2006 into 2003, 2004 and 2005.  For 2003 and 2004, expand 10% bracket

For years 2002-2010, there is a 10% bracket added before the 15% bracket.

For years 2001-2010 the 10% bracket is filled in manually to conform to the tax code.

For years 2001-2010 the other brackets are multiplied up by the inflation multiplier -- except for the 15% bracket after 2004.

For years 2003-2010 the 15% bracket for joint filers is determined with reference to the 15% bracket for single filers, as follows:

For 2003 and 2004, 200%.
For 2005, 180%.
For 2006, 187%.
For 2007, 193%.
For 2008-2010, 200%.

For years 2005-2010 the 15% bracket for surviving spouse is set to equal the amount for joint filers.

For years 2005-2010, the 15% bracket for MFS is set to be half the amount for joint filers.

For year 2011, we eliminate the 10% bracket and take 2001 and multiply by (1+inflation)^10.

For years after 2011, we take each previous year and multiply by (1+inflation).  

Increased standard deduction for married filing joint in 2003 and 2004

In 2003, single is 4750.

In 2003, MFJ is 2x single, rounded down to nearest $50.

In 2004, MFJ is 2x single, rounded down to nearest $50.

In 2005, MFJ is 1.74x single, rounded down to nearest $50.

In 2006, MFJ is 1.84x single, rounded down to nearest $50.

In 2007, MFJ is 1.87x single, rounded down to nearest $50.

In 2008, MFJ is 1.9x single, rounded down to nearest $50.

In 2009 and 2010, MFJ is 2x single, rounded down to nearest $50.

In 2003 through 2010, MFS is half MFJ, rounded down to nearest $50.

In all years, surviving spouse is same as MFJ.

In all years, head of household is the 2003 number increased by inflation and rounded down to nearest $50.

In 2011 and thereafter, all filing statuses are the 2002 amounts adjusted for inflation and rounded down to nearest $50.

Inflation adjustments in breakpoints for 2003

Entered new 2003 breakpoints.  Breakpoints increase with projected inflation for each year after 2003, subject to the specific exceptions enacted in JGTRRA and earlier legislation.

Child tax credit increases

Increased the child tax credit amount for 2003 and 2004, only, to $1,000.

Alt min tax exemption increases

Increased the Alternative Minimum Tax exemption amounts for 2003 and 2004 only, based on filing statuses as follows:

Single or Head of Household: $40,250 (was $35,750).

Filing jointly: $58,000 (was $49,000)

Married filing separately: $29,000 (was $24,500)

The point at which the exemption phases down to zero for married filing separate taxpayers increases to $191,000, up from $273,000, but only for 2003 and 2004.

Top capital gains tax rate falls from 20% to 15% in years 2003 through 2008, inclusive.

Made the calculation of estimated tax on sale of a residence depend on the year that residence is sold.

Liquidation distributions will depend on the year the distribution is made.

Dividends taxed like capital gains for a limited period

Dividends get capital gains treatment, but only through 2008.

In the Financial chapter, the user must now decide whether ordinary income is “interest” or “dividend” income.

Calculations of investments now total interest and dividend income separately.

Investments report now show interest and dividend income separately.

Pie chart showing the components of investment income is updated to show separate income and dividend.

Quick calculators have fields for interest and dividend income

Quick calculators’ pop-up tax calculation detail has separate lines for interest and dividends.

States’ pop-up federal tax calculation detail has separate lines for interest and dividends.

Quick Social security calc uses two separate fields to get investment income instead of the one, as does gross income, gross taxable income, and the earned income credit.

Existing files’ “Ordinary income” or “Interest and Dividends” lines will be converted to “Interest” when the file is first loaded, for the Advisor module, the Quick Calculator / Income and Tax, and for Florida Child Support.

Data entry sheets are modified to allow for the entry of interest and dividends separately.  

State tax impacts of interest and dividends change

The federal income tax calculation in the California child support guideline now considers interest and dividends separately.

For Florida, now we ask for interest and dividends separately, and add them separately into gross income.

In Pennsylvania, we treat all income as interest income for federal tax purposes.  

Enhancement not in tax act

Exemption amounts and the income levels at which exemptions phase out now increase with inflation. 

Regular annual income tax updates.

Updated tax rates, exemptions, standard deductions, earned income credit, hope and lifetime learning credit phase-out levels, standard deduction phase-out levels, and other variables that are adjusted annually for inflation.