•
$103,000 for married persons filing separately, $137,300
You used part of the home sold for nonresidential
for single individuals, $171,050 for heads of household,
purposes, such as for a home office, or
and $206,000 for married persons filing jointly. If your
•
You did not meet the ownership and use tests or
adjusted gross income is above the amount for your filing
sold the home within 2 years of an earlier home sale,
status, use the Deduction for Exemptions Worksheet in the
but the primary reason for the sale was a change in
Form 1040 instructions to figure the amount you can de-
place of employment, health, or unforeseen circum-
duct for exemptions.
stances. Unforeseen circumstances include death,
divorce, and the September 11, 2001, terrorist at-
Standard Mileage Rate Increased
tacks.
For more information, see Publication 523, Selling Your
Business-related mileage. For 2002, the standard mile-
Home.
age rate for the cost of operating your car, van, pickup, or
panel truck is increased to 36
1
/
cents a mile for all busi-
2
ness miles.
Frequent Flyer Miles
Car expenses and use of the standard mileage rate are
explained in chapter 4 of Publication 463, Travel, Enter-
Frequent flyer miles are a benefit provided under an airline
tainment, Gift, and Car Expenses.
frequent flyer program. They are also used as a promo-
tional benefit through rental car programs and hotels.
Medical and move-related mileage. For 2002, the stan-
The IRS has announced it will not claim that any tax-
dard mileage rate for the cost of operating your car for
payer has understated his or her federal tax liability by
medical reasons or as part of a deductible move is in-
reason of the receipt or personal use of frequent flyer miles
creased to 13 cents a mile. See Transportation under What
or other in-kind promotional benefits attributable to the
Medical Expenses Are Deductible in Publication 502, Med-
taxpayer’s business or official travel. Any future guidance
ical and Dental Expenses, or Travel by car under Deducti-
on the taxability of these benefits will be applied prospec-
ble Moving Expenses in Publication 521, Moving
tively.
Expenses.
This relief does not apply to travel or other promotional
benefits in the following three situations:
Survivor Benefits for
•
Public Safety Officers
When they are converted to cash,
•
When they are used as compensation (payment for
For tax years beginning after 2001, a survivor annuity
your services), or
received by the spouse, former spouse, or child of a public
•
safety officer killed in the line of duty will generally be
When they are used for tax avoidance purposes.
excluded from the recipient’s income regardless of the
date of the officer’s death. Survivor benefits received
before 2002 are excludable only if the officer died after
Reporting Interest and Dividends
1996. The exclusion provision applies to a chaplain killed
in the line of duty after September 10, 2001. For more
Interest or ordinary dividend income that exceeds a certain
information, see Public safety officers, in Publication 559,
amount must be reported on a separate schedule. For
Survivors, Executors, and Administrators.
2002, this amount has increased. If you file Form 1040A,
you must now attach Schedule 1 to your return if your
Retirement Planning Services
interest or dividend income is more than $1,500; if you file
Form 1040, you must now attach Schedule B to your return
The tax treatment of qualified retirement planning services
if your interest or dividend income is more than $1,500.
has been clarified. Beginning in 2002, if your employer has
Before 2002, you had to attach Schedule 1 or Schedule B if
a qualified retirement plan, qualified retirement planning
your interest or dividend income was more than $400.
services provided for you (or your spouse) by your em-
For more information, see the instructions for the sched-
ployer are not included in your income. For more informa-
ule you are filing.
tion, see Retirement Planning Services in Publication 525,
Taxable and Nontaxable Income.
Tax Benefits for Education
Tax Benefits When Selling Your Home
Educator Expenses
New rules apply to excluding gain from the sale of your
main home in certain situations. In most cases, the new
If you are an eligible educator, you can deduct as an
rules make it easier to exclude your gain from income.
adjustment to income up to $250 in qualified expenses.
These new rules may apply if:
You can deduct these expenses even if you do not itemize
deductions on Schedule A (Form 1040). This adjustment to
•
You had more than one home,
income is for expenses paid or incurred in tax years begin-
•
You sold vacant land adjacent to your main home,
ning during 2002 or 2003. Previously these expenses were
Chapter 1 Tax Changes for Individuals
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