Tax Tips - 2002

INCLUDED IN INCOME
wages salary fees tips commissions business profits gain on sale of real estate, securities, and other property interest received rents collected dividends royalties alimony and separate- maintenance payments	sick pay annuities and pensions, to the extent the return exceeds investment income from an interest in an estate or trust prizes and awards some fringe benefits up to 85% of social security benefits gambling winnings net of losses strike benefits unemployment compensation hobby income barter income illegal income

NOT INCLUDED IN INCOME

gifts and inheritances
interest from certain state and municipal bonds (or received by mutual funds that hold them)
employer reimbursements for business expenses (that you don't deduct)
returns of capital gain up to $500,000 on sale of primary residence (under certain conditions)
some or all of Social Security benefits
employer-paid health coverage for immediate family
compensation for sickness or injury
child support

welfare
accident-and health-insurance proceeds
life-insurance proceeds (estate tax may apply)
veterans benefits
scholarships and fellowships to a degree candidate in 2000 if used for certain purposes
14 days' rental income from house or vacation home
interest on Education Savings Bonds
dependent-child wages up to $2,800
child's investment income up to $700
federal income-tax refunds

2002 INCOME TAX RATES

	Taxable Income	Tax Rate (%)	Total Tax at Breakpoint	Phaseout Range of Personal Exemptions
Married Filing Jointly	0 - 12,200 12,001 - 46,700 46,701 - 112,850 112,851 - 171,950 171,951 - 307,050 307,051 and up	10 15 27 30 35 38.6	1,200.00 6,405.00 24,265.50 41,995.50 89,280.50	$ 206,600 - 328,500
Head of Household	0 - 10,000 10,001 - 37,450 37,451 - 96,700 96,701 - 156,600 156,601 - 307,050 307,051 and up	10 15 27 30 35 38.6	1,000.00 5,117.50 21,115.00 39,085.00 91,742.50	$ 171,650 - 294,150
Unmarried Individual	0 - 6,000 6,001 - 27,950 27,951 - 67,700 67,701 - 141,250 141,251 - 307,050 307,051 and up	10 15 27 30 35 38.6	600.00 3,892.50 14,625.00 36,690.00 94,720.00	$ 137,300 - 259,800
Married, Filing Separately	0 - 6,000 6,001 - 23,350 23,351 - 56,425 56,426 - 85,975 85,976 - 153,525 153,526 and up	10 15 27 30 35 38.6	600.00 3,202.50 12,132.75 20,997.75 44,640.25	$ 130,300 - 164,250
Estates & Trustees	0 - 1,850 1,851 - 4,400 4,401 - 6,750 6,751 - 9,200 9,201 and up	15 27 30 35 38.6	277.50 966.00 1,671.00 2,528.50

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2002 STANDARD DEDUCTION
	Under age 65		Age 65 or over
Married, Filing Jointly	$	7,850	8,750	Standard deduction for an individual claimed as a dependent by another cannot exceed the greater of $750 or the dependent's earned income + $250, up to the normal standard deduction. If one spouse filing separately itemizes, the other gets no standard deduction.
Head of Household		6,900	8,050
Unmarried Individuals		4,700	5,800
Married, Filing Separately		3,925	4,375
Blind taxpayers get an extra $900 if married, $1,150 if single.
CREDITS

Earned-Income Credit		The credit is "refundable" - even someone who owes no taxes can claim a "refund". It is supposed to urge low-income workers age 25 and above, by offsetting the impact of payroll taxes, to seek employment. The largest benefits - up to a bit over $4,000 - go to those with children, but couples with none can claim a few hundred dollars. The defiiniton of "earnings" for EIC purposes has been eased somewhat.

Child and Dependent Care		Care for your child under age 13 or disabled dependent while you work: 35% of up to $3,000 for one child, and of up to $6,000 for more than one. Phaseout of the credit starts at a higher AGI this year: $15,000.

Elderly Disabled		Credit is 15% of qualifying income; available to permanently disabled age 65 and over.