Individual Income Tax Returns 2003[968]

Individual Income Tax Returns, Preliminary Data, 2003 Data Release F 8 8 or 2003, taxpayers filed 130.6 million U.S. Statutory adjustments to total income increased individual income tax returns, an increase of 13.1 percent to $85.1 billion for Tax Year 2003. The 0.3 percent from the 130.2 million returns filed largest increase was in the self-employed health for 2002. For the first time in 3 years, Adjusted insurance deduction, which increased 55.4 percent to Gross Income (AGI) rose, increasing by 2.9 percent $15.6 billion. This $5.6-billion increase represented to $6.2 trillion for 2003. Tax Year 2003 had several more than half of the total increase in statutory adother notable changes. Taxable income increased justments and was partially due to a change in the 2.5 percent to $4.2 trillion, and alternative minimum law increasing the amount that could be deductible tax rose 41.9 percent to $8.7 billion. Despite these (see Change in Law section for details). The largest increases, total income tax fell 6.0 percent to $750.0 statutory adjustment was the deduction for selfbillion, and total tax liability decreased 5.6 percent to employment tax, representing 22.3 percent of the $787.8 billion. These decreases in tax were partially total. This adjustment to income increased 5.6 perdue to major changes in the law (including the Job cent to $19.0 billion. Payments to self-employed and Growth Tax Relief Reconciliation Act of 2003 retirement plans rose 8.4 percent to $16.9 billion, (JGTRRA)), which increased some adjustments, while payments to an Individual Retirement Arrangecredits, size of tax brackets, and standard deductions, ment (IRA) increased 5.5 percent to $10.2 billion. while lowering tax rates (see Changes in Law section The deduction for tuition and fees increased 8.2 for details). percent to $6.7 billion. Tax Year Figure A shows that the largest 2003 was just the second year that component of AGI, salaries and wages, these were deductible as an adjustFor the first time in 3 increased 2.2 percent to $4,696.5 billion ment to income. years, Adjusted Gross for Tax Year 2003, while the next Total deductions, the sum of the largest component of AGI, taxable standard deductions and total itemized Income (AGI) rose, pensions and annuities, rose 4.3 percent deductions (after limitation) equaled increasing by 2.9 to $378.6 billion. Net capital gains also $1,439.4 billion, an increase of 4.8 percent to $6.2 trillion rose 16.9 percent to $288.6 billion. percent from Tax Year 2002. The Declining income items were led by number of returns claiming the stanfor 2003. taxable interest, which decreased by dard deductions increased 2.4 per17.0 percent to $115.7 billion. Other cent, accounting for 65.0 percent of income items with notable percentage all returns filed and 38.8 percent of changes included capital gain distributions, which the total deductions amount. Due to the expanded declined 13.6 percent from $5.5 billion in 2002 to standard deduction for married couples filing joint $4.7 billion in 2003, and dividends, which increased returns (see Changes in Law) and inflation indexing 12.3 percent to $110.9 billion. Of this dividend total, for all filing statuses, the average standard deduction about 71.5 percent were reported as qualified divi(including both the basic and additional standard dends. The qualified dividends, introduced for the deductions) increased 10.3 percent from $5,963 for first time under JGTRRA, were taxed at lower rates 2002 to $6,579 for 2003. Itemized deductions were (as were long-term capital gains). These qualified claimed on 33.6 percent of all returns filed for 2003 dividends were reported on 22.5 million returns and and represented 61.2 percent of the total deductions totaled $79.2 billion (see Changes in Law section for amount [1]. The average total for itemized deducdetails). Also, business or profession net income tions (after limitation) was $20,076, a 4.1-percent increased by 5.0 percent from Tax Year 2002 to increase from the 2002 average of $19,293. Due to $261.4 billion. the AGI limitation on itemized deductions, 5.2 million higher-income taxpayers were unable to deduct $28.0 billion in itemized deductions, an increase of 6.7 percent from 2002. The interest paid deduction was This data release was written by Brian Balkovic, an economist with the Individual Statistics Branch Returns the largest deduction, comprising 36.5 percent of total Analysis Section, under the direction of Jeff Hartzok, itemized deductions (before limitations). For 2003, it Chief. decreased 3.3 percent to $332.0 billion. The taxes Individual Income Tax Returns, Preliminary Data, 2003 Figure A Individual Income Tax Returns, Preliminary Data: Selected Income and Tax Items, Tax Years 2002 and 2003 [Money amounts are in thousands of dollars] Item 2002 (1) 130,201,415 80,490,588 28,906,249 20,804,579 53,719,882 6,039,405,382 111,350,158 4,594,558,226 63,740,332 139,294,544 4,451,532 53,883,081 31,405,307 98,758,800 N/A N/A 23,919,233 22,653,944 428,548 6,321,174 13,736,189 248,994,633 4,852,573 34,527,253 10,816,038 246,831,535 7,616,563 5,471,012 13,297,296 29,898,639 774,613 6,702,014 882,024 8,983,762 8,367,444 88,699,036 23,033,571 363,178,764 5,582,242 61,749,654 4,893,695 35,623,474 2003 (2) 130,571,319 80,193,301 29,827,251 20,550,767 62,180,894 6,212,974,067 111,350,057 4,696,501,144 59,591,835 115,682,836 4,525,688 51,795,259 30,450,215 110,863,179 22,470,605 79,229,288 24,748,822 22,170,414 427,110 6,095,856 14,407,862 261,375,371 4,990,662 38,380,163 10,085,562 288,629,772 7,311,132 4,726,887 12,808,729 28,921,930 784,336 7,521,982 902,097 7,048,185 8,677,735 88,599,170 23,058,944 378,632,948 5,582,974 64,468,069 4,838,985 37,999,493 Percentage change (3) 0.3 -0.4 3.2 -1.2 15.8 2.9 (Z) 2.2 -6.5 -17.0 1.7 -3.9 -3.0 12.3 N/A N/A 3.5 -2.1 -0.3 -3.6 4.9 5.0 2.8 11.2 -6.8 16.9 -4.0 -13.6 -3.7 -3.3 1.3 12.2 2.3 -21.5 3.7 -0.1 0.1 4.3 (Z) 4.4 -1.1 6.7 Number of returns, total................................................................................ Form 1040 returns....................................................................................... Form 1040A returns..................................................................................... Form 1040EZ returns ¹ ............................................................................... 1,2 Electronically-filed returns ......................................................................... Adjusted gross income (less deficit)........................................................... Salaries and wages: Number of returns…………….................................................................. Amount……………………........................................................................ Taxable interest: Number of returns.................................................................................. Amount……………………………........................................................... Tax-exempt interest: ³ Number of returns.................................................................................. Amount………………………………….................................................... Dividends: Number of returns.................................................................................. Amount……………………….................................................................. Qualified dividends: Number of returns.................................................................................. Amount……………………….................................................................. State income tax refunds: Number of returns.................................................................................. Amount……………………………........................................................... Alimony received: Number of returns.................................................................................. Amount…………………......................................................................... Business or profession net income: Number of returns.................................................................................. Amount……………………………........................................................... Business or profession net loss: Number of returns.................................................................................. Amount………………............................................................................. Net capital gain: 4 Number of returns.................................................................................. Amount……………………….................................................................. Capital gain distributions: 4 Number of returns............................................................................ Amount………………....................................................................... Net capital loss: Number of returns.................................................................................. Amount………………............................................................................. Sales of property other than capital assets, net gain: Number of returns.................................................................................. Amount……………................................................................................. Sales of property other than capital assets, net loss: Number of returns.................................................................................. Amount……………................................................................................. Taxable Individual Retirement Arrangement distributions: Number of returns.................................................................................. Amount……………................................................................................. Taxable pensions and annuities: Number of returns.................................................................................. Amount……………................................................................................. Rent and royalty net income: Number of returns.................................................................................. Amount……………................................................................................. Rent and royalty net loss: Number of returns.................................................................................. Amount……………................................................................................. Footnotes at end of figure. 9 Individual Income Tax Returns, Preliminary Data, 2003 Figure A--Continued Individual Income Tax Returns, Preliminary Data: Selected Income and Tax Items, Tax Years 2002 and 2003--Continued [Money amounts are in thousands of dollars] Item Partnership and S Corporation net income: Number of returns.................................................................................. Amount……………................................................................................. Partnership and S Corporation net loss: Number of returns.................................................................................. Amount……………................................................................................. Estate and trust net income: Number of returns.................................................................................. Amount……………………….................................................................. Estate and trust net loss: Number of returns.................................................................................. Amount……........................................................................................... Farm net income: Number of returns.................................................................................. Amount……………………...................................................................... Farm net loss: Number of returns.................................................................................. Amount…………………......................................................................... Unemployment compensation: Number of returns.................................................................................. Amount…………………......................................................................... Taxable Social Security benefits: Number of returns.................................................................................. Amount…………………......................................................................... Total statutory adjustments: Number of returns.................................................................................. Amount…………………......................................................................... Educator expenses: Number of returns............................................................................... Amount…………….............................................................................. Payments to an Individual Retirement Arrangement: Number of returns............................................................................... Amount…………….............................................................................. Student loan interest deduction: Number of returns............................................................................... Amount................................................................................................ Tuition and fees deduction: Number of returns............................................................................... Amount…………….............................................................................. Medical savings account deduction: Number of returns............................................................................... Amount…………….............................................................................. Moving expenses adjustment: Number of returns............................................................................... Amount…………….............................................................................. Self-employment tax deduction: Number of returns............................................................................... Amount…………….............................................................................. Self-employed health insurance deduction: Number of returns............................................................................... Amount…………….............................................................................. Payments to a self-employed retirement (Keogh) plan: Number of returns............................................................................... Amount…………….............................................................................. Penalty on early withdrawal of savings: Number of returns............................................................................... Amount................................................................................................ Alimony paid: Number of returns............................................................................... Amount…………….............................................................................. Footnotes at end of figure. 2002 (1) 4,014,896 284,700,191 2,201,777 56,029,034 508,734 10,556,522 36,687 633,567 560,357 6,537,448 1,431,285 20,219,702 10,423,027 43,411,772 10,829,281 94,696,163 28,868,674 75,291,939 2,918,977 719,526 3,323,683 9,639,868 6,679,730 4,483,269 3,473,139 6,224,780 63,897 128,367 942,457 2,204,827 14,567,832 17,985,927 3,452,308 10,019,154 1,181,103 15,590,116 810,755 195,551 591,534 7,060,478 2003 (2) 4,139,385 301,171,011 2,371,920 56,220,101 460,487 11,494,374 29,622 562,851 595,750 7,560,081 1,402,196 19,513,364 10,133,305 44,185,367 11,098,826 99,080,506 30,352,239 85,137,579 3,275,128 813,913 3,462,006 10,166,576 7,031,160 4,470,823 3,603,729 6,737,825 63,450 119,800 1,029,309 2,483,169 15,253,702 18,986,750 3,658,160 15,569,662 1,193,324 16,899,066 734,368 153,102 582,671 7,303,956 Percentage change (3) 3.1 5.8 7.7 0.3 -9.5 8.9 -19.3 -11.2 6.3 15.6 -2.0 -3.5 -2.8 1.8 2.5 4.6 5.1 13.1 12.2 13.1 4.2 5.5 5.3 -0.3 3.8 8.2 -0.7 -6.7 9.2 12.6 4.7 5.6 6.0 55.4 1.0 8.4 -9.4 -21.7 -1.5 3.4 10 10 Individual Income Tax Returns, Preliminary Data, 2003 Figure A--Continued Individual Income Tax Returns, Preliminary Data: Selected Income and Tax Items, Tax Years 2002 and 2003--Continued [Money amounts are in thousands of dollars] Item Total deductions: Number of returns...................................................................................... Amount…………………….......................................................................... Basic standard deduction: Number of returns............................................................................... Amount…………….............................................................................. Additional standard deduction: Number of returns............................................................................... Amount…………….............................................................................. Total itemized deductions (after limitation): Number of returns.................................................................................. Amount……………………...................................................................... Itemized deductions in excess of limitation: Number of returns............................................................................... Amount…………….............................................................................. Medical and dental expenses deduction: Number of returns............................................................................... Amount…………….............................................................................. Taxes paid deduction: Number of returns............................................................................... Amount…………….............................................................................. Interest paid deduction: Number of returns............................................................................... Amount…………….............................................................................. Charitable contributions deduction: Number of returns............................................................................... Amount…………….............................................................................. Taxable income: Number of returns...................................................................................... Amount…………………….......................................................................... Alternative minimum tax: Number of returns...................................................................................... Amount…………………….......................................................................... Income tax before credits: Number of returns...................................................................................... Amount…………………….......................................................................... Total tax credits: 5 Number of returns...................................................................................... Amount…………………….......................................................................... Child care credit: Number of returns.................................................................................. Amount…………………......................................................................... Credit for the elderly or disabled: Number of returns.................................................................................. Amount…………………......................................................................... Child tax credit: Number of returns.................................................................................. Amount…………………......................................................................... Education tax credits: Number of returns.................................................................................. Amount…………………......................................................................... Retirement savings contributions credit: Number of returns.................................................................................. Amount…………………......................................................................... Adoption credit: Number of returns.................................................................................. Amount…………………......................................................................... Foreign tax credit: Number of returns.................................................................................. Amount…………………......................................................................... Footnotes at end of figure. 2002 (1) 128,482,042 1,373,598,790 82,909,453 479,281,798 10,986,607 15,079,165 45,572,589 879,237,828 5,199,946 26,240,256 8,527,941 51,873,191 44,742,669 298,629,419 37,509,263 343,191,909 40,443,074 136,356,466 102,462,477 4,099,015,901 1,916,291 6,156,281 102,479,207 836,773,441 40,636,192 38,985,352 6,194,033 2,710,432 134,742 21,317 25,975,097 21,562,208 6,529,334 4,933,542 5,370,533 1,071,537 54,229 213,558 3,742,101 5,216,722 2003 (2) 128,796,092 1,439,376,664 84,934,121 542,758,782 11,335,359 16,064,490 43,861,971 880,553,392 5,237,245 28,010,193 8,630,911 55,003,108 42,996,756 307,102,902 36,105,945 331,988,244 38,642,066 139,666,085 101,669,737 4,202,698,688 2,379,473 8,737,246 101,686,410 791,129,805 41,219,145 41,108,685 6,340,695 3,222,404 125,555 20,600 25,741,752 22,815,814 7,358,503 5,900,877 5,383,851 1,053,786 62,749 319,185 4,146,797 5,014,266 Percentage change (3) 0.2 4.8 2.4 13.2 3.2 6.5 -3.8 0.1 0.7 6.7 1.2 6.0 -3.9 2.8 -3.7 -3.3 -4.5 2.4 -0.8 2.5 24.2 41.9 -0.8 -5.5 1.4 5.4 2.4 18.9 -6.8 -3.4 -0.9 5.8 12.7 19.6 0.2 -1.7 15.7 49.5 10.8 -3.9 11 Individual Income Tax Returns, Preliminary Data, 2003 Figure A--Continued Individual Income Tax Returns, Preliminary Data: Selected Income and Tax Items, Tax Years 2002 and 2003--Continued [Money amounts are in thousands of dollars] Item General business credit: Number of returns.................................................................................. Amount…………………......................................................................... Prior year minimum tax credit: Number of returns.................................................................................. Amount…………………......................................................................... Self-employment tax: Number of returns...................................................................................... Amount…………………….......................................................................... Total earned income credit (EIC): Number of returns...................................................................................... Amount…………………….......................................................................... EIC used to offset income tax before credits: Number of returns.................................................................................. Amount…………………......................................................................... EIC used to offset other taxes: Number of returns.................................................................................. Amount…………………......................................................................... Excess EIC, refundable portion: Number of returns.................................................................................. Amount…………………......................................................................... Additional child tax credit: Number of returns...................................................................................... Amount....................................................................................................... Total income tax: Number of returns...................................................................................... Amount…………………….......................................................................... Total tax liability: Number of returns...................................................................................... Amount…………………….......................................................................... N/A - Not applicable. ¹ Includes TeleFile returns. 2 Included in data for Forms 1040, 1040A, and 1040EZ. 3 Not included in adjusted gross income. 4 Includes capital gain distributions reported on Form 1040 and Schedule D. 5 Includes EIC used to offset income tax before credits, shown separately later in this figure. ( Z ) Less than 0.05 percent. NOTE: Detail may not add to totals because of rounding. 2002 (1) 262,280 636,282 175,592 927,308 14,567,832 35,964,558 21,895,212 38,687,554 4,208,306 1,125,694 4,148,714 3,392,664 18,971,435 34,169,197 10,997,600 6,452,429 91,078,328 797,791,644 94,204,253 834,265,347 2003 (2) 239,664 510,617 238,477 882,136 15,253,702 37,965,977 22,233,971 39,124,190 3,642,470 936,451 4,429,878 3,745,552 19,382,974 34,442,188 12,627,142 9,131,488 89,103,880 750,024,250 92,542,668 787,833,443 Percentage change (3) -8.6 -19.7 35.8 -4.9 4.7 5.6 1.5 1.1 -13.4 -16.8 6.8 10.4 2.2 0.8 14.8 41.5 -2.2 -6.0 -1.8 -5.6 12 12 Individual Income Tax Returns, Preliminary Data, 2003 paid deduction, accounting for 33.8 percent of the total (before limitations), increased 2.8 percent to $307.1 billion. The charitable contribution deduction increased 2.4 percent to $139.7 billion. Total tax credits used to offset income tax liabilities increased 5.4 percent to $41.1 billion. About 25.7 million taxpayers claimed $22.8 billion in child tax credits, up 5.8 percent from the $21.6 billion in 2002. For Tax Year 2003, the amount of this credit increased from $600 to $1,000 per eligible child. However, this increase is not fully reflected in the Tax Year 2003 data because many taxpayers received advances of up to $400 per child prior to filing their tax returns. The data for these advances are not included in the statistics for this article. Large percentage increases were reported for education tax credits (totaling $5.9 billion, a 19.6-percent increase from 2002), and the child care credit (totaling $3.2 billion, an 18.9-percent increase from 2002). See Changes in Law section concerning the latter. The credit that declined the largest dollar amount was the foreign tax credit, which decreased 3.9 percent to $5.0 billion. The total earned income credit (EIC) increased 1.1 percent to $39.1 billion for Tax Year 2003. The portion of the EIC used to offset income tax before credits decreased 16.8 percent to $0.9 billion, and the portion of the EIC used to offset other taxes (such as the self-employment tax) rose 10.4 percent to $3.7 billion. The largest part of the EIC, the refundable portion, was treated as a refund and paid directly to taxpayers who had no tax liability against which to apply the credit. The refundable portion of the EIC increased 0.8 percent to $34.4 billion for 2003. The comparisons of data for Tax Years 2002 and 2003 in this article are based on the preliminary estimates for both years. A few income and tax items tend to be understated in preliminary estimates; therefore, comparisons based on preliminary estimates for 1 year and final estimates for the previous year could be misleading. Comparisons based entirely on preliminary estimates reduce the likelihood of misinterpretation of the data and afford a more accurate representation of year-to-year changes. Final statistics for Tax Year 2002 are available in the Fall 2004 issue of the Bulletin. Changes in Law In general, the definitions used in this article are the same as those in Statistics of Income--2002, Individual Income Tax Returns. The following is a partial list of tax law and Internal Revenue Service administrative changes that had a major bearing on the Tax Year 2003 preliminary data presented in this article. Alternative Minimum Tax (AMT).--For Tax Year 2003, the AMT exemption amounts increased by $9,000 for married tax payers filing joint returns and surviving spouses, and by $4,500 for single taxpayers or couples filing separate returns. This increased the AMT exemption amounts to $58,000 for married couples filing a joint return and surviving spouses, $29,000 for married couples filing separate returns, estates, and trusts, and $40,250 for single taxpayers and heads of household. Child and Dependent Care Credit.--Beginning for 2003, the limit on the amount of qualifying expenses increased to $3,000 for one qualifying individual and to $6,000 for two or more qualifying individuals. Previously, these amounts were $2,400 and $4,800, respectively. Along with this, the maximum credit was also increased to $1,050 for the care of one qualifying person and $2,100 for the care of two or more qualifying persons. These amounts were $800 and $1,600 in Tax Year 2002. Also, the income related phase-down of the Child Care Credit rate was liberalized. For example, for 2002 and previous years, taxpayers with an AGI of $28,000 or more received the 20-percent mimimum percentage amount applied to their child care expenses. For 2003, this was increased to $43,000 of AGI. Child Tax Credits.--Modifications were made to the child tax credit for 2003. In 2003, taxpayers were allowed a maximum tax credit of $1,000 for each of their qualifying children under the age of 17, whereas, for 2002, the maximum credit was $600 per child. For 2003, up to $400 per eligible child was given in advance to taxpayers based on the age of eligible children and their Tax Year 2002 returns. Dividends and Capital Gains.--The Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA) lowered the maximum capital gain tax rates from 8 percent or 10 percent to 5 percent and from 20 percent to 15 percent. These rates applied to most long-term (holding period of more than 1 year) sales, exchanges, and conversions--including installment payments received--after May 5, 2003. There was no change in the rates for gains taxed at 25 percent or 28 percent. Also, JGTRRA applied the 13 Individual Income Tax Returns, Preliminary Data, 2003 14 14 new rates to qualified dividends received after 2002. Qualified dividends are the ordinary dividends received in tax years beginning after 2002 that met certain conditions. These included: the dividend must have been paid by a U.S. corporation or a “qualified” foreign corporation; the stock ownership must have met certain holding period requirements; the dividends were not from certain institutions, such as mutual savings banks, cooperative banks, credit unions, tax-exempt organizations, or farmer cooperatives; and the dividends were not for any share of stock which was part of an employee stock ownership plan (ESOP). Earned Income Credit.--The maximum amount of the earned income credit increased, as did the amounts of earned income and investment income an individual could have and still claim the credit. The maximum amount of investment income (interest, dividends and capital gain income) a taxpayer could have and still claim the credit increased to $2,600 from $2,550. The maximum credit for taxpayers with no qualifying children increased to $382 from $376. For these taxpayers, earned income and AGI had to be less than $11,230 ($12,230 if married filing jointly). For taxpayers with one qualifying child, the maximum credit increased $41 to $2,547, and, for taxpayers with two or more qualifying children, the maximum credit increased to $4,204 from $4,140. To be eligible for the credit, a taxpayer’s earned income and AGI had to be less than $29,666 ($30,666 for married filing jointly) for one qualifying child, or less than $33,692 ($34,692 for married filing jointly) for two or more qualifying children. Prior to Tax Year 2002, marital status had no effect on the amount of EIC or these income thresholds. Indexing.--The following items increased due to indexing for inflation: personal exemption amounts, the basic standard deduction amounts, the tax bracket boundaries, and the beginning income amounts for limiting certain itemized deductions and for the phaseout of personal exemptions. The maximum amount of earnings subject to self-employment tax increased based on the percentage change in average covered earnings. Individual Retirement Arrangement Deduction.-For 2003, the modified AGI thresholds increased allowing for more taxpayers to deduct contributions to individual retirement plans. A taxpayer or both taxpayers, for taxpayers filing jointly, were able to take an IRA deduction up to $3,000 ($3,500 if age 50 or older) if covered by a retirement plan and their modified AGI was less than $50,000 ($70,000 if married filing jointly or qualifying widow(er)). This was up from the $44,000 ($64,000 if married filing jointly or qualifying widow(er)) set in 2002. Limit on Itemized Deductions Increased.--If adjusted gross income was above a certain amount, certain itemized deductions were limited. In 2003, the AGI threshold for limitations increased to $139,500 ($69,750 if married filing separately). In 2002, the amount was $137,300 ($68,650 if married filing separately). Section 179 Deductions.--The maximum section 179 deduction (full expensing of certain depreciable property) that could be elected for property placed in service in 2003 increased from $24,000 to $100,000 for qualified section 179 property ($135,000 for qualified zone property, qualified renewal property, or qualified New York Liberty Zone property). This limit was reduced by the amount by which the cost of section 179 property placed in service during the tax year exceeded $400,000 (increased from $200,000). Standard Deduction Amount Increased.--The standard deduction for people who did not itemize deductions on Schedule A of Form 1040 was, in most cases, higher for 2003 than it was for 2002. The amount depended on filing status, being 65 or older or blind, and whether an exemption could be claimed for a taxpayer by another person. For 2003, the standard deduction increased to $9,500 for joint filiers, up from $7,850 in 2002. For single filers and married filing separately, the deduction amount increased to $4,750. For heads of household, the deduction was $7,000. Tax Rate Reduction.--For tax years beginning after December 31, 2001, a 10-percent regular income tax rate bracket was used for a portion of all taxpayers’ taxable incomes. For 2003, the size of this bracket was expanded by $2,000 for married filing joint returns ($1,000 for single or married filing separately). The width of the 15-percent bracket was also expanded for joint returns. For taxable years beginning in 2003, JGTRRA increased the upper end of the 15-percent income tax rate bracket for married taxpayers filing joint returns to twice the upper end of the 15-percent income tax rate bracket for single returns. Also, for Tax Year 2003, there was a reduction of the former tax rates of 27.0 percent, 30.0 percent, 35.0 percent, and 38.6 percent Individual Income Tax Returns, Preliminary Data, 2003 to 25.0 percent, 28.0 percent, 33.0 percent, and 35.0 percent, respectively. Self-Employed Health Insurance Deduction.-A self-employed taxpayer was able to deduct up to 100 percent of health insurance expenses for 2003, up from 70 percent for 2002. Data Sources and Limitations The preliminary statistics in this data release are based on a sample of individual income tax returns (Forms 1040, 1040A, and 1040EZ including electronically-filed returns) filed during Calendar Year 2004. Returns in the sample were stratified based on: (1) the larger of positive income or negative income; (2) the size of business and farm receipts; (3) the presence or absence of specific forms or schedules; and (4) the usefulness of returns for Treasury Department tax modeling purposes [2]. Returns were then selected at rates ranging from 0.05 percent to 100 percent. The preliminary Tax Year 2003 data are based on a sample of 148,908 returns and an estimated final population of 131,316,806 returns. The corresponding sample and population for the preliminary 2002 data were 143,577 and 130,462,606 returns, respectively. Since the data presented here are estimates based on a sample of returns filed, they are subject to sampling error. To properly use the statistical data provided, the magnitude of the potential sampling error must be known; coefficients of variation (CV’s) are used to measure that magnitude. The reliability of estimates based on samples, and the use of coefficients of variation for evaluating the precision of estimates based on samples, are discussed in the appendix to this issue of the Bulletin. While the preliminary estimates are intended to represent a full year of taxpayer reporting, they are actually based on returns processed for tax administration purposes, in the case of 2003 returns, between January and late September of 2004. In general, returns processed during the remainder of each year tend to have somewhat different characteristics compared to returns processed earlier. These characteristics include, for example, disproportionately large amounts of investment income, passive losses, and alternative minimum tax. Notes and References [1] The remaining 1.4 percent of the returns did not need to claim either a standard deduction or itemized deductions because no AGI was reported. [2] Returns in the sample were stratified based on the presence or absence of one or more of the following forms or schedules: Form 2555, Foreign Earned Income; Form 1116, Foreign Tax Credit (Individual, Fiduciary, or NonResident Alien Individual); Schedule C, Profit or Loss from Business (Sole Proprietorship); and Schedule F, Profit or Loss From Farming. 15 Individual Income Tax Returns, Preliminary Data, 2003 Table 1.--Individual Income Tax Returns, Tax Year 2003 Preliminary Data: Selected Income and Tax Items, by Size of Adjusted Gross Income [All figures are estimates based on samples--money amounts are in thousands of dollars] $15,000 Item All returns (1) Number of returns, total.......................................................... Form 1040 returns................................................................. Form 1040A returns.............................................................. Form 1040EZ returns ².......................................................... 2, 3 Electronically-filed returns .................................................. 130,571,319 80,193,301 29,827,251 20,550,767 62,180,894 Under $15,000 ¹ (2) 37,985,339 15,260,594 10,403,827 12,320,915 17,214,903 211,227,348 29,061,919 220,282,637 10,458,876 12,355,191 535,559 2,859,600 5,179,435 7,026,723 3,634,881 3,438,914 760,713 484,218 84,007 644,282 4,443,137 29,538,291 920,409 12,658,551 1,214,156 6,057,863 231,584 67,034 2,540,480 5,763,100 112,352 785,393 158,608 3,198,861 1,628,339 6,385,505 4,349,555 27,804,879 891,824 4,939,609 663,485 5,918,398 368,687 2,923,947 under $30,000 (3) 29,738,980 13,213,650 11,453,543 5,071,783 16,006,171 653,834,424 25,280,385 522,911,086 9,284,126 13,342,248 487,630 2,814,157 4,084,538 7,239,002 2,826,527 3,771,852 2,042,415 967,872 112,828 942,561 2,603,915 31,161,082 872,595 5,303,380 1,198,963 4,267,807 163,827 69,408 1,478,700 3,226,933 110,269 589,676 79,494 212,851 1,922,871 10,415,678 5,197,083 61,328,163 841,016 4,320,641 626,752 3,802,499 362,912 3,531,250 Size of adjusted gross income $30,000 $50,000 under $50,000 (4) 24,469,392 15,638,793 6,142,046 2,688,554 12,186,043 954,681,212 21,894,205 787,266,239 11,267,331 13,586,335 668,025 4,097,400 4,836,123 8,789,068 3,512,532 5,076,549 5,038,562 2,728,912 124,565 1,292,527 2,330,894 32,077,709 1,010,168 5,969,291 1,343,911 6,304,109 175,367 20,550 1,904,046 4,086,205 117,029 769,959 134,113 582,944 1,717,923 14,022,452 4,709,409 75,281,949 933,070 5,542,581 888,090 6,049,668 492,892 6,714,238 under $100,000 (5) 26,935,410 24,638,057 1,827,836 469,517 12,404,285 1,889,302,141 24,684,634 1,544,914,162 18,432,372 25,154,147 1,210,617 9,001,745 9,191,142 19,763,450 6,731,548 12,651,623 11,096,356 7,806,190 83,533 1,867,034 3,178,203 57,597,773 1,500,624 7,674,099 2,664,331 21,683,876 328,153 119,833 3,595,013 7,931,562 211,185 1,554,943 218,450 584,230 2,387,862 29,821,253 6,304,605 134,620,232 1,556,330 13,109,831 1,616,292 11,364,886 1,120,299 20,116,108 $100,000 under $200,000 (6) 8,901,359 8,901,359 --3,686,813 1,174,675,124 8,216,945 922,865,476 7,714,263 18,290,868 867,694 9,333,662 5,104,109 19,455,784 3,973,643 14,462,867 4,561,091 4,982,741 17,444 638,473 1,339,644 52,798,932 521,133 3,507,923 1,679,316 35,529,154 164,154 30,143 2,251,295 5,189,804 125,744 1,091,007 147,247 621,218 801,113 19,098,016 2,018,595 60,587,227 862,533 12,048,120 761,109 5,999,284 941,930 38,063,934 $200,000 or more (7) 2,540,844 2,540,844 --682,680 1,329,253,818 2,211,967 698,261,544 2,434,866 32,954,050 756,164 23,688,693 2,054,870 48,589,150 1,791,472 39,827,481 1,249,682 5,200,479 4,733 710,978 512,070 58,201,583 165,735 3,266,916 880,037 214,453,663 41,759 26,330 1,039,191 2,724,326 107,753 2,731,003 164,184 1,848,082 219,627 8,856,266 479,697 19,010,498 498,201 24,507,286 283,257 4,864,763 852,666 229,821,535 16 Adjusted gross income (less deficit)..................................... 6,212,974,067 Salaries and wages: Number of returns……………........................................... 111,350,057 Amount……………………................................................. 4,696,501,144 Taxable interest: Number of returns........................................................... 59,591,835 Amount……………………………..................................... 115,682,836 4 Tax-exempt interest: Number of returns........................................................... 4,525,688 Amount…………………………………............................. 51,795,259 Dividends: Number of returns........................................................... 30,450,215 Amount………………………............................................ 110,863,179 Qualified dividends: Number of returns........................................................... 22,470,605 Amount………………………............................................ 79,229,288 State income tax refunds: Number of returns........................................................... 24,748,822 Amount……………………………..................................... 22,170,414 Alimony received: Number of returns........................................................... 427,110 Amount…………………................................................... 6,095,856 Business or profession net income: Number of returns........................................................... 14,407,862 Amount……………………………..................................... 261,375,371 Business or profession net loss: Number of returns........................................................... 4,990,662 Amount………………...................................................... 38,380,163 Net capital gain reported on Schedule D: Number of returns........................................................... 8,980,717 Amount………………………............................................ 288,296,474 Capital gain distributions reported on Form 1040: Number of returns........................................................... 1,104,846 Amount………………...................................................... 333,298 Net capital loss: Number of returns........................................................... 12,808,729 Amount………………...................................................... 28,921,930 Sales of property other than capital assets, net gain: Number of returns........................................................... 784,336 Amount…………….......................................................... 7,521,982 Sales of property other than capital assets, net loss: Number of returns........................................................... 902,097 Amount…………….......................................................... 7,048,185 Taxable Individual Retirement Arrangement distributions: Number of returns........................................................... 8,677,735 Amount…………….......................................................... 88,599,170 Taxable pensions and annuities: Number of returns........................................................... 23,058,944 Amount…………….......................................................... 378,632,948 Rent and royalty net income: Number of returns........................................................... 5,582,974 Amount…………….......................................................... 64,468,069 Rent and royalty net loss: Number of returns........................................................... 4,838,985 Amount…………….......................................................... 37,999,493 Partnership and S Corporation net income: Number of returns........................................................... 4,139,385 Amount…………….......................................................... 301,171,011 Footnotes at end of table. 16 Individual Income Tax Returns, Preliminary Data, 2003 Table 1.--Individual Income Tax Returns, Tax Year 2003 Preliminary Data: Selected Income and Tax Items, by Size of Adjusted Gross Income--Continued [All figures are estimates based on samples--money amounts are in thousands of dollars] $15,000 Item All returns (1) Partnership and S Corporation net loss: Number of returns........................................................... 2,371,920 Amount…………….......................................................... 56,220,101 Estate and trust net income: Number of returns........................................................... 460,487 Amount………………………............................................ 11,494,374 Estate and trust net loss: Number of returns........................................................... 29,622 Amount……..................................................................... 562,851 Farm net income: Number of returns........................................................... 595,750 Amount……………………............................................... 7,560,081 Farm net loss: Number of returns........................................................... 1,402,196 Amount…………………................................................... 19,513,364 Unemployment compensation: Number of returns........................................................... 10,133,305 Amount…………………................................................... 44,185,367 Taxable Social Security benefits: Number of returns........................................................... 11,098,826 Amount…………………................................................... 99,080,506 Total statutory adjustments: Number of returns........................................................... 30,352,239 Amount…………………................................................... 85,137,579 Educator expenses: Number of returns........................................................ 3,275,128 Amount……………....................................................... 813,913 Payments to an Individual Retirement Arrangement: Number of returns........................................................ 3,462,006 Amount……………....................................................... 10,166,576 Student loan interest deduction: Number of returns........................................................ 7,031,160 Amount......................................................................... 4,470,823 Tuition and fees deduction: Number of returns........................................................ 3,603,729 Amount......................................................................... 6,737,825 Medical savings account deduction: Number of returns........................................................ 63,450 Amount......................................................................... 119,800 Moving expenses adjustment: Number of returns........................................................ 1,029,309 Amount……………....................................................... 2,483,169 Self-employment tax deduction: Number of returns........................................................ 15,253,702 Amount……………....................................................... 18,986,750 Self-employed health insurance deduction: Number of returns........................................................ 3,658,160 Amount……………....................................................... 15,569,662 Payments to a self-employed retirement (Keogh) plan: Number of returns........................................................ 1,193,324 Amount……………....................................................... 16,899,066 Penalty on early withdrawal of savings: Number of returns........................................................ 734,368 Amount......................................................................... 153,102 Alimony paid: Number of returns........................................................ 582,671 Amount……………....................................................... 7,303,956 Total deductions: Number of returns............................................................... 128,796,092 Amount……………………................................................... 1,439,376,664 Basic standard deduction: Number of returns........................................................ 84,934,121 Amount……………....................................................... 542,758,782 Footnotes at end of table. Under $15,000 ¹ (2) 458,934 26,296,770 65,053 278,384 5,171 213,153 142,304 813,205 298,846 5,721,640 2,186,154 7,605,049 90,387 408,869 6,008,149 7,232,766 105,499 22,690 211,972 473,303 652,978 315,675 640,139 1,308,175 3,155 1,574 138,154 269,147 4,461,744 2,232,678 620,824 1,802,903 27,502 131,127 169,802 46,299 45,223 436,245 36,222,127 213,531,343 34,233,719 181,598,473 under $30,000 (3) 266,144 2,464,983 55,104 307,849 6,275 30,886 110,934 970,125 256,463 2,788,502 2,908,833 12,748,825 2,144,581 3,826,097 5,264,948 8,880,157 300,361 71,944 685,135 1,643,493 1,436,224 801,334 469,160 787,845 12,707 19,821 197,603 263,596 2,699,083 2,501,377 654,965 2,132,101 59,319 224,834 130,808 16,375 62,454 331,534 29,730,010 228,870,908 24,994,053 163,506,351 Size of adjusted gross income $30,000 $50,000 under $50,000 (4) 359,302 3,643,722 69,698 407,352 12 363 126,504 1,457,930 282,013 2,847,408 2,154,680 10,001,972 3,468,447 20,179,129 5,986,625 11,789,059 726,227 168,419 938,024 2,576,759 1,930,615 1,300,491 564,812 823,012 12,050 17,069 212,729 428,774 2,408,094 2,638,115 635,907 2,312,794 101,689 674,936 138,269 26,270 99,998 581,586 24,466,395 236,326,009 15,511,126 111,394,740 under $100,000 (5) 611,810 5,911,187 123,023 1,002,991 3,661 2,728 166,137 2,213,709 399,197 4,043,960 2,300,641 10,675,356 3,882,945 49,235,723 8,580,942 21,674,868 1,492,852 376,470 1,078,889 3,284,477 2,546,320 1,830,884 1,203,027 2,218,873 14,748 25,827 311,350 855,774 3,356,779 4,712,961 854,419 3,558,706 319,204 2,627,174 208,592 46,665 200,059 1,853,599 26,935,410 389,202,694 9,155,669 77,048,801 $100,000 under $200,000 (6) 426,082 5,450,579 85,941 1,835,475 7,250 47,224 34,554 1,126,329 114,099 1,669,959 521,453 2,746,058 1,129,190 18,370,423 3,444,605 17,997,967 587,925 159,086 450,660 1,665,299 465,023 222,439 726,593 1,599,920 10,780 25,387 136,882 443,335 1,552,161 3,622,458 504,571 2,909,494 385,042 5,208,317 69,041 11,548 114,759 1,773,710 8,901,359 216,169,393 870,296 7,766,052 $200,000 or more (7) 249,646 12,452,862 61,669 7,662,321 7,256 268,496 15,317 978,780 51,577 2,441,894 61,544 408,109 383,278 7,060,267 1,066,971 17,562,757 62,265 15,304 97,322 523,248 ----10,011 30,125 32,591 222,545 775,841 3,279,161 387,473 2,853,665 300,569 8,032,679 17,857 5,941 60,177 2,327,280 2,540,795 155,276,317 169,256 1,444,364 17 Individual Income Tax Returns, Preliminary Data, 2003 Table 1.--Individual Income Tax Returns, Tax Year 2003 Preliminary Data: Selected Income and Tax Items, by Size of Adjusted Gross Income--Continued [All figures are estimates based on samples--money amounts are in thousands of dollars] Size of adjusted gross income Item All returns Under $15,000 ¹ (2) 4,344,969 5,810,062 1,988,406 26,122,805 --1,297,424 10,143,683 1,788,238 4,397,970 1,171,971 8,009,166 1,403,583 2,025,772 12,928,476 40,466,447 8,121 48,329 12,931,087 4,139,100 3,021,584 494,276 80,821 13,589 79,636 15,497 450,300 55,495 675,687 210,683 320,731 79,365 --201,935 6,339 2,932 907 427 73 4,461,744 4,463,157 $15,000 under $30,000 (3) 3,326,799 4,863,642 4,735,954 60,500,914 --2,141,652 13,667,224 4,449,624 10,865,245 3,214,335 21,998,484 3,717,486 7,509,200 26,289,704 265,732,033 4,113 26,825 26,290,022 31,257,511 11,320,621 6,529,435 1,190,922 574,625 45,922 5,103 6,243,059 3,158,620 1,931,723 1,355,430 2,439,181 541,485 990 330 384,422 32,131 7,329 3,398 2,662 1,542 2,699,083 5,001,449 $30,000 under $50,000 (4) 1,871,816 2,712,856 8,955,269 122,218,415 --2,404,765 12,876,872 8,764,619 29,201,558 7,112,502 49,636,439 7,565,860 15,628,458 24,148,682 561,937,162 17,127 20,359 24,153,450 74,410,461 10,205,616 9,981,745 1,481,931 829,422 --7,144,811 6,660,626 2,078,547 1,784,981 2,623,940 432,938 8,469 8,833 547,772 64,440 40,718 44,379 14,986 17,906 2,408,094 5,275,018 $50,000 under $100,000 (5) 1,498,209 2,220,810 17,779,740 309,933,084 102,011 35,261 2,380,171 13,451,372 17,631,775 96,331,926 15,513,183 131,061,634 16,048,460 42,777,843 26,874,727 1,287,713,965 187,913 235,844 26,879,223 194,064,449 12,367,324 15,424,377 2,488,148 1,230,739 --9,743,864 10,886,691 2,647,141 2,548,286 --35,908 164,217 1,309,991 297,964 90,147 126,295 75,132 74,593 3,356,779 9,424,236 $100,000 under $200,000 (6) 244,503 382,688 8,031,063 208,020,652 2,764,340 2,067,185 368,385 3,873,425 7,996,818 80,304,485 7,093,205 80,504,466 7,615,564 30,459,771 8,889,842 880,791,014 867,940 1,894,654 8,893,411 167,955,191 3,375,896 3,446,326 926,569 482,792 --**2,159,718 **2,054,386 25,353 1,418 --17,379 145,779 972,424 517,318 55,617 71,025 92,524 127,368 1,552,161 7,244,175 $200,000 or more (7) 49,064 74,432 2,371,538 153,757,520 2,370,895 25,907,747 38,513 990,531 2,365,682 86,001,720 2,000,746 40,778,054 2,291,110 41,265,041 2,538,306 1,166,058,065 1,294,259 6,511,235 2,539,217 319,303,094 928,105 5,232,524 172,301 91,236 --** ** 53 79 --3 27 730,251 4,096,073 42,920 264,613 52,745 660,655 775,841 6,557,947 18 (1) Additional standard deduction: Number of returns........................................................ 11,335,359 Amount……………....................................................... 16,064,490 Total itemized deductions (after limitation): Number of returns........................................................... 43,861,971 Amount……………………............................................... 880,553,392 Itemized deductions in excess of limitation: Number of returns........................................................ 5,237,245 Amount……………....................................................... 28,010,193 Medical and dental expenses deduction: Number of returns........................................................ 8,630,911 Amount……………....................................................... 55,003,108 Taxes paid deduction: Number of returns........................................................ 42,996,756 Amount……………....................................................... 307,102,902 Interest paid deduction: Number of returns........................................................ 36,105,945 Amount……………....................................................... 331,988,244 Charitable contributions deduction: Number of returns........................................................ 38,642,066 Amount……………....................................................... 139,666,085 Taxable income: Number of returns............................................................... 101,669,737 Amount……………………................................................... 4,202,698,688 Alternative minimum tax: Number of returns............................................................... 2,379,473 Amount……………………................................................... 8,737,246 Income tax before credits: Number of returns............................................................... 101,686,410 Amount……………………................................................... 791,129,805 5 Total tax credits: Number of returns............................................................... 41,219,145 Amount……………………................................................... 41,108,685 Child care credit: Number of returns........................................................... 6,340,695 Amount…………………................................................... 3,222,404 Credit for the elderly or disabled: Number of returns........................................................... 125,555 Amount…………………................................................... 20,600 Child tax credit: Number of returns........................................................... 25,741,752 Amount…………………................................................... 22,815,814 Education tax credits: Number of returns........................................................... 7,358,503 Amount…………………................................................... 5,900,877 Retirement savings contributions credit: Number of returns........................................................... 5,383,851 Amount…………………................................................... 1,053,786 Adoption credit: Number of returns........................................................... 62,749 Amount…………………................................................... 319,185 Foreign tax credit: Number of returns........................................................... 4,146,797 Amount............................................................................ 5,014,266 General business credit: Number of returns........................................................... 239,664 Amount…………………................................................... 510,617 Prior year minimum tax credit: Number of returns........................................................... 238,477 Amount…………………................................................... 882,136 Self-employment tax: Number of returns............................................................... 15,253,702 Amount……………………................................................... 37,965,977 Footnotes at end of table. 18 Individual Income Tax Returns, Preliminary Data, 2003 Table 1.--Individual Income Tax Returns, Tax Year 2003 Preliminary Data: Selected Income and Tax Items, by Size of Adjusted Gross Income--Continued [All figures are estimates based on samples--money amounts are in thousands of dollars] Size of adjusted gross income Item All returns (1) Total earned income credit (EIC): Number of returns............................................................... Amount……………………................................................... EIC used to offset income tax before credits: Number of returns........................................................... Amount…………………................................................... EIC used to offset other taxes: Number of returns........................................................... Amount…………………................................................... Excess EIC, refundable portion: Number of returns........................................................... Amount…………………................................................... Additional child tax credit: Number of returns............................................................... Amount................................................................................ Total income tax: Number of returns............................................................... Amount……………………................................................... Total tax liability: Number of returns............................................................... Amount……………………................................................... 22,233,971 39,124,190 3,642,470 936,451 4,429,878 3,745,552 19,382,974 34,442,188 12,627,142 9,131,488 89,103,880 750,024,250 92,542,668 787,833,443 Under $15,000 ¹ (2) 12,162,171 21,508,875 1,244,182 101,483 2,909,227 2,301,344 10,734,323 19,106,050 2,861,541 926,370 11,033,988 3,644,967 13,263,977 6,002,033 $15,000 under $30,000 (3) 9,092,898 17,194,661 2,157,056 786,015 1,349,155 1,390,195 7,924,158 15,018,450 7,060,922 5,528,081 18,519,724 24,728,074 19,285,890 28,302,449 $30,000 under $50,000 (4) 978,905 420,655 241,231 48,953 171,494 54,011 724,493 317,689 2,396,377 2,353,095 21,572,242 64,429,746 21,939,799 69,941,012 $50,000 under $100,000 (5) --------303,766 318,460 26,550,789 178,640,073 26,620,444 189,457,159 $100,000 under $200,000 (6) --------4,534 5,484 8,888,831 164,508,868 8,893,521 172,740,451 $200,000 or more (7) ----------2,538,303 314,072,521 2,539,034 321,390,338 ** Data combined to prevent disclosure of specific taxpayer information. ¹ Includes returns with adjusted gross deficit. ² Includes TeleFile returns. ³ Included in data for Forms 1040, 1040A, and 1040EZ. 4 Not included in adjusted gross income. 5 Includes EIC used to offset income tax before credits, shown separately later in this table. NOTE: Detail may not add to totals because of rounding. 19 SOURCE: IRS, Statistics of Income Winter 2004-2005 Bulletin, Publication 1136.