Publication 554 - Older Americans' Tax Guide - 2002 Page 17
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each spouse, even if one spouse has little or no compen-
You are filing a tax return for a short tax year be-
sation.
cause of a change in your annual accounting period,
or
For more information on the general limit and the
•
spousal IRA limit, see How Much Can Be Contributed? in
You are a nonresident or dual-status alien during the
Publication 590.
year. You are considered a dual-status alien if you
were both a nonresident alien and a resident alien
Deductible contribution. Generally, you can deduct
during the year. If you are a nonresident alien who is
the lesser of the contributions to your traditional IRA for the
married to a U.S. citizen or resident at the end of the
year or the general limit (or spousal IRA limit, if applicable)
year, you can choose to be treated as a U.S. resi-
for your IRA. However, if you or your spouse was cov-
dent. See Publication 519, U.S. Tax Guide for
ered by an employer retirement plan at any time during
Aliens. If you make this choice, you can take the
the year for which contributions were made, you may not
standard deduction.
be able to deduct all of the contributions. Your deduction
may be reduced or eliminated, depending on your filing
status and the amount of your income.
Higher standard deduction for age 65 or older. You are
entitled to a higher standard deduction if you are age 65 or
Nondeductible contribution. The difference between
older at the end of the year. You are considered 65 on the
your total permitted contributions and your total deductible
day before your 65th birthday. Therefore, you can take the
contributions, if any, is your nondeductible contribution.
higher standard deduction for 2002 if your 65th birthday
You must file Form 8606, Nondeductible IRAs, to report
was on or before January 1, 2003.
nondeductible contributions even if you do not have to file
Use Table 4 –2 to find the amount of your standard
a tax return for the year.
deduction.
Roth IRA. Regardless of your age, you may be able to
Higher standard deduction for blindness. If you are
establish and contribute to a Roth IRA. You cannot claim a
blind on the last day of the year and you do not itemize
deduction for any contributions to a Roth IRA. But, if you
deductions, you are entitled to a higher standard deduc-
satisfy the requirements, all earnings are tax free and
tion. Use Table 4 –2 to find the amount. You qualify for this
neither your nondeductible contributions nor any earnings
benefit if you are totally or partly blind.
on them are taxable when you withdraw them.
Partly blind. If you are partly blind, you must get a
certified statement from an eye physician or registered
optometrist that:
•
You cannot see better than 20/200 in the better eye
4.
with glasses or contact lenses, or
•
Your field of vision is not more than 20 degrees.
Deductions
If your eye condition will never improve beyond these
limits, the statement should include this fact. You must
Most taxpayers have a choice of taking a standard deduc-
keep the statement in your records.
tion or itemizing their deductions. You benefit from the
If your vision can be corrected beyond these limits only
standard deduction if your standard deduction is more than
by contact lenses that you can wear only briefly because of
the total of your allowable itemized deductions. If you have
pain, infection, or ulcers, you can take the higher standard
a choice, you should use the method that gives you the
deduction for blindness if you otherwise qualify.
lower tax.
Spouse 65 or older or blind. You can take a higher
standard deduction if your spouse is age 65 or older or
Standard Deduction
blind and:
1) You file a joint return, or
The standard deduction is a dollar amount that reduces
the amount of income on which you are taxed. It is a benefit
2) You file a separate return and can claim an exemp-
that eliminates the need for many taxpayers to itemize
tion for your spouse because your spouse had no
actual deductions. The standard deduction is higher for
gross income and an exemption for your spouse
taxpayers who are age 65 or older or blind.
could not be claimed by another taxpayer.
The standard deduction amounts for most taxpayers
under age 65 are shown in Table 4 –1.
You cannot claim the higher standard deduction
!
for an individual other than yourself and your
Persons not eligible for the standard deduction. Your
spouse.
CAUTION
standard deduction is zero and you should itemize any
deductions you have if:
Decedents. The amount of the standard deduction for a
•
You are married and filing a separate return, and
decedent’s final return is the same as it would have been
your spouse itemizes deductions,
had the decedent continued to live. However, if the dece-
Chapter 4 Deductions
Page 17
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