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Old tax laws, new amounts
By Kay
Bell • Bankrate.com
While there are several tax-law changes every year,
there also are some old tax form stand-bys that filers are accustomed
to seeing.
These provisions remain the same, but they are adjusted
to reflect inflation. Here are five old tax laws and their new amounts
that could affect your tax bill this year:
- Standard deductions: Most
taxpayers use the standard
deduction rather than itemize. On 2002 returns, nonitemizing
single filers can deduct $4,700 ($150 more than last year); married
couples filing jointly and qualifying widows or widowers can take
$7,850 (a $250 increase); head-of-household filers get a $6,900
standard deduction (up $250); and married couples filing separately
can deduct $3,925 (the smallest increase, only $125).
- Personal exemptions:
You, your spouse and each person listed on your tax return as
a dependent
translate into exemptions that can cut your tax bill. You're all
worth $3,000 apiece, $100 more than the previous tax year.
- Foreign income exclusion:
International
workers get a bigger tax break this year. These filers don't
have to count as U.S. taxable income up to $80,000 that they earned
while abroad as long as they paid foreign taxes on the money.
That's $2,000 more than the year before. To take advantage of
this tax break, file Form 2555, Foreign Earned Income.
- Earned income credit: Workers
on the other end of the income scale also get an added inflationary
break. The earned
income tax credit helps cut the tax bill of taxpayers who
make below a certain wage limit. This filing season, a childless
person who earned up to $11,060 can apply for the credit. Married
couples who file jointly and support two or more children can
claim the credit if their combined income was $34,177 or less.
- Car costs: Did you
use
your car for business last year? You can write off that mileage
at the standard rate of 36.5 cents per mile. This is 2 cents more
than the year before, thanks in large part to higher gasoline
prices. Don't forget to figure other 2002 tax-deductible travel:
14 cents a mile for charity-related
travel and 13 cents a mile if you used
your car for medical reasons.
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