December 2002 

Dear Client, 

Although no major new tax legislation was passed in 2002, this year some additional credits and deductions from previous tax legislation go into effect.  Significant aspects of the tax provisions effective for 2002 are provided here for your information.

 For 2002, self-employed individuals can deduct 70% of the amount paid for health insurance premiums, up from 60% in 2001.  For 2003, the percentage is scheduled to go up to 100%.

 In 2002, the standard mileage rate for business travel is 36.5 cents per mile.  The rate for medical mileage is 13 cents per mile and charitable mileage is 14 cents per mile.  For 2003, the business mileage rate decreases to 36 cents per mile, medical mileage decreases to 12 cents per mile and charitable mileage remains at 14 cents per mile.

 In 2002, the contribution limits to regular and Roth IRAs increased to $3,000.  Taxpayers age 50 and over can contribute an additional $500.  401(k) plans have increased contribution limits to $11,000 and taxpayers age 50 and over can contribute an additional $1,000.

 For 2002, taxpayers can deduct up to $3,000 of qualified higher education tuition and related expenses.  This deduction is also available even if you don’t itemize.  This deduction is phased out for joint taxpayers with income over $130,000 and single taxpayers with income over $65,000.

 Up to $2,500 in student loan interest is deductible on 2002 returns.  This deduction is phased out for joint taxpayers with income over $130,000 and single taxpayers with income over $65,000.  The payments no longer have to be in the first 60 months to be deductible.

 There is a new deduction for teachers who can now deduct up the $250 for classroom materials that are not reimbursed.  This deduction is available even if you don’t itemize. 

My office offers a full range of tax services including free electronic filing of Federal and State income tax returns.  Direct deposit of tax refunds is available for taxpayers filing either electronic or paper returns.  Please note that the location of my office has changed.

 Please call my office if you have questions about your tax situation or need assistance with tax planning.  You are also encouraged to send me e-mail at michelle@mbcpa.com.  Lastly, in response to your inquiries, I always welcome new business from good clients like yourself.

 Best wishes for a happy and prosperous New Year.

 Sincerely, 

 

Michelle M. Biess, CPA