Publication 553 - Highlights Of 2002 Tax Changes Page 18
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31Indian Employment Credit Extended
•
Your taxable compensation, or
•
$3,500 (up from $2,000).
The Indian employment credit that was scheduled to expire
for tax years beginning after 2003 has been extended to
Besides being able to contribute a larger amount for
include a tax year beginning in 2004. For more information
2002, you may be able to deduct a larger amount. See
about this credit, see Publication 954, Tax Incentives for
How Much Can I Deduct? in chapter 1 of Publication 590.
Empowerment Zones and Other Distressed Communities.
Increased Roth IRA Contribution Limit
If contributions on your behalf are made only to Roth IRAs,
3.
your contribution limit generally is the lesser of:
•
Your taxable compensation, or
IRAs and Other
•
$3,000 (up from $2,000).
Retirement Plans
If you are age 50 or older by the end of 2002 and
contributions on your behalf are made only to Roth IRAs,
your contribution limit generally is the lesser of:
2002 Changes
•
Your taxable compensation, or
•
$3,500 (up from $2,000).
New Retirement Savings
However, if your modified AGI is above a certain
Contributions Credit
amount, your contribution limit may be reduced.
For tax years beginning after 2001, if you are an eligible
Limit if Contributions to Both Traditional
individual, you may be able to claim a credit for a percent-
age of your qualified retirement savings contributions,
and Roth IRAs for Same Year
such as contributions to your traditional or Roth IRA or
If contributions are made on your behalf for 2002 to both a
salary reduction contributions to your SEP or SIMPLE
Roth IRA and a traditional IRA, your contribution limit
plan. To be eligible, you must be at least age 18 at the end
generally is the lesser of :
of the year and not a student or an individual for whom
someone else claims a personal exemption. Also, your
•
Your taxable compensation minus all contributions
adjusted gross income (AGI) must be below a certain
(other than employer contributions under a SEP or
amount.
SIMPLE IRA plan) for the year to all IRAs other than
For more information, see chapter 5 in Publication 590,
Roth IRAs, or
Individual Retirement Arrangements (IRAs), and Form
•
$3,000 ($3,500 if you are age 50 or older by the end
8880, Credit for Qualified Retirement Savings Contribu-
tions.
of 2002) (up from $2,000) minus all contributions
(other than employer contributions under a SEP or
SIMPLE IRA plan) for the year to all IRAs other than
Individual Retirement Arrangements
Roth IRAs.
(IRAs)
However, if your modified AGI is above a certain amount,
Beginning in 2002, the following changes apply to IRAs.
your contribution limit may be reduced.
For more information, see Publication 590, Individual Re-
tirement Arrangements (IRAs).
Modified AGI Limit for Traditional IRA
Contributions Increased
Increased Traditional IRA Contribution and
If you are covered by a retirement plan at work, your
Deduction Limit
deduction for contributions to a traditional IRA will be
reduced (phased out) if your modified adjusted gross in-
Generally, the most that can be contributed to your tradi-
come (AGI) is between:
tional IRA is the lesser of:
•
$54,000 and $64,000 for a married couple filing a
•
Your taxable compensation, or
joint return or a qualifying widow(er),
•
$3,000 (up from $2,000).
•
$34,000 and $44,000 for a single individual or head
of household, or
If you are age 50 or older by the end of 2002, the most
•
that can be contributed to your traditional IRA generally is
$–0– and $10,000 for a married individual filing a
the lesser of:
separate return.
Page 18
Chapter 3 IRAs and Other Retirement Plans
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