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Withholding tax to decrease for MUSC paychecks You may notice a little more money in your MUSC paycheck beginning June 1, thanks to the Jobs and Growth Tax Reconciliation Act of 2003. This law, signed by President Bush on May 28, incorporates new federal withholding tables, which lowers the federal tax withheld from your paycheck. In lowering the tax rate retroactive to Jan. 1, Congress recognized that tax withholding has already occurred at the higher rates required under the previous law. Employees will have to claim the overwithheld amounts on their 2003 personal income tax return that should be filed in 2004.  You can adjust your withholding to bring the tax paid close to the tax owed, but you may not claim more allowances than you are entitled to, based on expected exemptions, deductions and credits. To avoid an estimated tax penalty for not paying enough during the year, you may want to see how much your federal withholding drops prior to making any W-4 changes (if any). Individual income tax rates The new law extended the 10 percent rate to cover the first $7,000 of taxable income for single persons ($14,000 for married couples). It also lowered the tax rates above 15 percent to 25, 28, 33 and 35 percent. This is a drop of two percentage points for each rate except the top one, which went down 3.6 points. The supplemental tax rate was also reduced by 2 points from 27 percent to 25 percent.  Child tax credit Under the new law the child tax credit was increased from $600 to $1,000 per qualified child for tax years 2003 and 2004.  A qualified child is generally defined as a child under age 17, a citizen or resident of the United States, claimed as the taxpayer’s dependent, and be the taxpayer’s (a) child, stepchild, adopted child, or grandchild; (b) sibling, stepsibling, or a descendant of any of them, whom the taxpayer cared for as his or her own child, or (c) eligible foster child. Beginning on July 25, the Treasury Department will begin issuing advanced payments of $400 for each qualifying child based on 2002 tax returns. The checks will be sent according to the last two digits of the taxpayer’s social security number: 00-33 will be mailed July 25; 34-66  will be mailed Aug. 1; 67-99 will be mailed Aug. 8. Employees do not have to take any action to apply for this payment.  The IRS will automatically mail a notice and check to each eligible taxpayer. For additional information on the Jobs and Growth Tax Reconciliation Act of 2003 can be found at http://www.irs.gov.   Catalyst Online is published weekly, updated as needed and improved from time to time by the MUSC Office of Public Relations for the faculty, employees and students of the Medical University of South Carolina. Catalyst Online editor, Kim Draughn, can be reached at 792-4107 or by email, catalyst@musc.edu. Editorial copy can be submitted to Catalyst Online and to The Catalyst in print by fax, 792-6723, or by email to petersnd@musc.edu or catalyst@musc.edu. To place an ad in The Catalyst hardcopy, call Community Press at 849-1778.