If you've got a refund coming, hopefully you've already started on your income taxes. And tax time is a good time not only to review last year's numbers, but to see what changes are in store this year.
A lot of the taxes we pay, and deductions we get, are tied to inflation. Which means that they change every year. So let's look at the changes, good and bad, that will be heading our way this year.
Social Security and Personal Exemptions
First, the bad news. Last year, you had to pay Social Security taxes on the first $85,000 you made. This year, you'll be paying on the first 87-thousand. That could cost you an extra $130. Double that if you're self-employed.
Now some good news. Personal exemptions rise $50 this year, from $3,000 to $3,050, which will save you almost $14 for each exemption if you're in the 27 percent bracket.
And speaking of the 27 percent tax bracket, you'll be able to make more before you get there this year. So on a joint return in '02, you paid 27 percent tax on your adjusted gross income over $46,700. This year, the threshold is $750 higher. Here's the schedule for more detailed information.
And here's another plus. Last year families could claim a credit for $2,400 in child care expenses per child that increases $600 this year.
You may not remember all of these changes, but remember this. Before you put last year's tax stuff away, do a little planning on this year's, and enjoy a less taxing 2003.