Publication 505 - Tax Withholding And Estimated Tax Page 3

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The credit and exclusion amounts in-
ously, the limit was $2,000. The new limit de-
you are age 50 or over). However, for SIMPLE
creased to a maximum of $10,000.
pends on your age at the end of the year.
plans, the amount is increased to $7,000
($7,500 if you are age 50 or over).
The modified AGI phaseout amounts in-
If you are under age 50, the most you can
creased.
New credit for elective deferrals and IRA
contribute is the smaller of $3,000, or your
contributions. You may be able to take a credit
taxable compensation.
of up to $1,000 for qualified retirement savings
Benefits for public safety officer’s survivors.
If you are age 50 or older, the most you
contributions.
For tax years beginning after 2001, a survivor
can contribute is the smaller of $3,500, or
annuity received by the spouse, former spouse,
your taxable compensation.
Meal expenses when subject to “hours of
or child of a public safety officer killed in the line
service limits.” If you are subject to the De-
of duty will generally be excluded from the
Rollovers of IRAs into qualified plans. For
partment of Transportation’s “hours of service”
recipient’s income regardless of the date of the
distributions after December 31, 2001, you may
limits, the percentage of your business-related
officer’s death. Survivor benefits received
be able to roll over tax free, a distribution from
meal expenses that you can deduct has in-
before 2002 are excluded only if the officer died
your IRA into a qualified plan.
after 1996.
creased. For 2002 and 2003, you can deduct
Rollovers of distributions from employer
65% if the meals take place during or incident to
Foreign earned income exclusion. The
plans. For distributions after December 31,
the period subject to those limits.
amount of foreign earned income that you can
2001, you can roll over both the taxable and
exclude will increase to $80,000. See Publica-
nontaxable part of a distribution from a qualified
tion 54.
plan into a traditional IRA.
Hardship exception to the 60-day rule. For
Important Reminder
Self-employed health insurance deduction.
distributions after December 31, 2001, the IRS
The part of your self-employed health insurance
may waive the 60-day requirement to roll over
premiums that you can deduct as an adjustment
Photographs of missing children. The Inter-
distributions from your IRA or your employer’s
to income increases to 70%.
nal Revenue Service is a proud partner with the
pension plan where the failure to do so would be
National Center for Missing and Exploited Chil-
against equity or good conscience, including
Retirement savings plans. The following
dren. Photographs of missing children selected
casualty, disaster, or other events beyond your
paragraphs highlight changes that affect individ-
reasonable control.
by the Center may appear in this publication on
ual retirement arrangements (IRAs) and pen-
pages that would otherwise be blank. You can
Limit on elective deferrals. The maximum
sion plans.
help bring these children home by looking at the
Increased IRA contribution and deduc-
amount of elective deferrals under a salary re-
photographs and calling 1 – 800 – THE – LOST
tion limit. Your maximum contribution (and any
duction agreement that can be contributed to a
allowable deduction) limit is increased. Previ-
qualified plan is increased to $11,000 ($12,000 if
(1 – 800 – 843 – 5678) if you recognize a child.
Page 3

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