A column on personal finance prepared by the Virginia Society of Certified Public Accountants
ESTIMATED TAXES AND THE NEW TAX ACT
(July 18, 2003) - Most taxpayers don’t have to do a thing to reap the key benefits of the $350 billion Jobs and Growth Tax Relief Reconciliation Act of 2003 signed into law on May 28, 2003. By mid-summer, when employers start using new tax withholding tables that reflect the reduction in the tax rates, employees can expect to see higher paychecks. And, beginning in late July, the IRS will automatically send taxpayers who qualify a check representing an advance payment of the increase in the child tax credit.
According to the Virginia Society of CPAs, self-employed individuals and taxpayers with significant investment income don’t have it quite as easy. In order to take immediate advantage of the lower tax rates on regular income, capital gains, and dividends this year, they will have to adjust their estimated tax payments. Those estimated payments are due September 15, 2003, and January 15, 2004.
Use IRS Form 1040ES to calculate estimated tax payments
Form 1040ES, Estimated Tax for Individuals, comes with a worksheet you can use to estimate how much tax you will owe for 2003. Be sure to consider the following changes in the 2003 Act when making those estimations:
A CPA Can Help
Computing your taxes based on the new rates for income, capital gains, and dividends will help you avoid paying more than necessary in estimated taxes and making, in effect, an interest-free loan to the government. A CPA can help you compute your estimated taxes.
The Virginia Society of CPAs is the leading professional association dedicated to enhancing the success of all CPAs and their profession by communicating information and vision, promoting professionalism, and advocating members’ interests. Founded in 1909, the Society has nearly 8,000 members who work in public accounting, industry, government and education. This Money Management column and other financial news articles can be found in the Press Room on the VSCPA Web site at www.vscpa.com.
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