Line 23 - IRA Deduction
If you made any nondeductible contributions to a traditional IRA for 2001,
you must report them on Form 8606.
If you made contributions to a traditional individual retirement arrangement (IRA)
for 2001, you may be able to take an IRA deduction. But you, or your spouse if filing a
joint return, must have had earned income to do so. For IRA purposes, earned income
includes certain alimony received. See Pub. 590
for details. You should receive a statement by May 31, 2002, that shows all contributions
to your traditional IRA for 2001.
Use the worksheet on page 28 to figure
the amount, if any, of your IRA deduction. But read the following list before you
fill in the worksheet.
- If you were age 70 1/2 or older at the end
of 2001, you cannot deduct any contributions made to your traditional IRA for 2001
or treat them as nondeductible contributions.
- You cannot deduct contributions to a Roth IRA or a Coverdell educational savings account.
If you made contributions to both a traditional
IRA and a Roth IRA for 2001, do not use the worksheet on page 28. Instead, use the worksheet
in Pub. 590 to figure the amount, if any, of
your IRA deduction.
- You cannot deduct contributions to a 401(k) plan, section 457 plan, SIMPLE plan, or the Federal
Thrift Savings Plan. These amounts are not included as income in box 1 of your W-2 form.
- If you made contributions to your IRA in 2001 that you deducted for 2000, do not include them in the worksheet.
- If you received a distribution from a nonqualified deferred compensation plan or
section 457 plan that is included in box 1 of your W-2 form, do not include that distribution on Line 8 of the worksheet. The
distribution should be shown in box 11 of your W-2 form. If it is not, contact your employer for the amount of the distribution.
- You must file a joint return to deduct contributions to your spouse’s IRA. Enter
the total IRA deduction for you and your spouse on Line 23.
- Do not include rollover contributions in figuring your deduction. Instead, see the instructions for
Lines 15a and 15b on page 23.
- Do not include trustee’s fees that were billed separately and paid by you for your
IRA. These fees can be deducted only as an itemized deduction on Schedule A.
- If the total of your IRA deduction on line 23 plus any
nondeductible contribution to your traditional IRAs shown on Form
8606 is less than your total traditional IRA contributions for 2001, see
Pub. 590 for special rules.
By April 1 of the year after the year in which you turn age 70 1/2, you must
start taking minimum required distributions from your traditional IRA. If you do not,
you may have to pay a 50% additional tax on the amount that should have been
distributed. For details, including how to figure the minimum required distribution,
see Pub. 590.
Were You Covered by a Retirement Plan?
p>If you were covered by a retirement plan
(qualified pension, profit-sharing (including 401(k)), annuity, Keogh, SEP, SIMPLE,
etc.) at work or through self-employment, your IRA deduction may be reduced or eliminated. But you can still make contributions
to an IRA even if you cannot deduct them. In any case, the income earned on your IRA
contributions is not taxed until it is paid to you.
The “Retirment plan” box in box 13 of your
W-2 form should be checked if you were covered by a plan at work even if you were
not vested in the plan. You are also covered by a plan if you were self-employed and had
a SEP, SIMPLE or qualified retirement plan.
If you were covered by a retirement plan and you file
Form 2555, 2555-EZ, or
8815, or you exclude employer-provided adoption
benefits, see Pub. 590 to figure the amount,
if any, of your IRA deduction.
Married Persons Filing Separately. If you were not covered by a retirement plan but
your spouse was, you are considered covered by a plan unless you lived apart from
your spouse for all of 2001.
Line 24 - Student Loan Interest Deduction
Use the worksheet on page 29 to figure your
student loan interest deduction if all five of the following apply.
- You paid interest in 2001 on a qualified student loan (see page 29).
- At least part of the interest paid in 2001 was paid during the first 60 months that
interest payments were required to be made. Example on page 29
- Your filing status is any status except married filing separately.
- Your modified adjusted gross income (AGI) is less than: $55,000 if single, head
of household, or qualifying widow(er); $75,000 if married filing jointly. Use lines 3 through 5 of the worksheet on
page 29 to figure their modified AGI.
- You are not claimed as a dependent on someone’s (such as your parent’s) 2001 tax return.
Exception. Use Pub. 970 instead of the worksheet on page 29 to figure your student loan interest deduction if you file Form 2555, 2555-EZ, or 4563, or you exclude income from sources within Puerto Rico.
Example. You took out a qualified student
loan in 1994 while in college. You had 6 years to repay the loan and your
first monthly payment was due July 1996, after you graduated. You made a
payment every month as required. If you meet items 3 through 5 listed on page 28, you may use only the interest you paid for January through June 2001
to figure your deduction. June is the end of the 60-month period (July 1996-
Qualified Student Loan. This is any loan
you took out to pay the qualified higher education expenses for yourself, your
spouse, or anyone who was your dependent when the loan was taken out. The person for
whom the expenses were paid must have been an eligible student . However, a loan is not a qualified student loan if (a) any of the proceeds were used for other
purposes or (b) the loan was from either a related person or a person who borrowed the
proceeds under a qualified employer plan or a contract purchased under such a plan. To
find out who is a related person, see Pub.
Qualified higher education expenses generally include tuition, fees, room and
board, and related expenses such as books and supplies. The expenses must be for education in a degree, certificate, or similar
program at an eligible educational institution. An eligible educational institution includes most colleges, universities, and
certain vocational schools. You must reduce the expenses by the following nontaxable
- Employer-provided educational assistance benefits that are not included in box
1 of your W-2 form(s).
- Excludable U.S. series EE and I savings bond interest from
- Qualified distributions from a Coverdell education savings account.
- Any scholarship, educational assistance allowance, or other payment (but not
gifts, inheritances, etc.) excluded from income.
For more details on these expenses, see Pub. 970.
An eligible student is a person who:
- Was enrolled in a degree, certificate, or other program (including a program of study
abroad that was approved for credit by the institution at which the student was enrolled) leading to a recognized educational
credential at an eligible educational institution, and
- Carried at least half the normal full-time workload for the course of study he or
she was pursuing.
Student Loan Interest Deduction Worksheet--Line 24
Line 25 - Archer MSA Deduction
If you made a contribution to an Archer MSA for 2001, you may be able to take this deduction. See Form 8853.
Line 26 - Moving Expenses
If you moved in connection with your job or business or started a new job, you may
be able to take this deduction. But your new workplace must be at least 50 miles farther
from your old home than your old home was from your old workplace. If you had no
former workplace, your new workplace must be at least 50 miles from your old
home. Use Tele-Tax Topic 455 or see Form 3903.
Line 27 - One-Half of Self-Employment Tax
If you were self-employed and owe self-employment tax, fill in Schedule SE to
figure the amount of your deduction.
Line 28 - Self-Employed Health Insurance Deduction
You may be able to deduct part of the amount paid for health insurance
for yourself, your spouse, and dependents if either of the following applies.
- You were self-employed and had a net profit for the year.
- You received wages in 2001 from an S corporation in which you were a more-than-2% shareholder. Health insurance benefits paid for you may be shown in box 14
of your W-2 form.
The insurance plan must be established under your business. But if you were also
eligible to participate in any subsidized health plan maintained by your or your
spouse’s employer for any month or part of a month in 2001, amounts paid for health
insurance coverage for that month cannot be used to figure the deduction. For example,
if you were eligible to participate in a subsidized health plan maintained by your
spouse’s employer from September 30 through December 31, you cannot use
amounts paid for health insurance coverage for September through December to figure
your deduction. For more details, see Pub.
If you qualify to take the deduction, use the worksheet on page 30
to figure the amount you can deduct.
Exception. Use Pub. 535 instead of the
worksheet on page 30 to find out how to
figure your deduction if any of the following apply.
Line 29 -Self-Employed SEP and SIMPLE, and Qualified Plans
If you were self-employed or a partner, you may be able to take this
deduction. See Pub. 560 or if you were a
minister, see Pub. 517.
Line 30 - Penalty on Early Withdrawal of Savings
The Form 1099-INT or
Form 1099-OID you received
will show the amount of any penalty you were charged.
Lines 31a and 31b - Alimony Paid
If you made payments to or for your spouse or former spouse under a divorce or separation instrument, you may be able to take
this deduction. Use Tele-Tax Topic 452 or see Pub. 504.
Include in the total on Line 32 any of the following adjustments. To find out if you
can take the deduction, see the form or publication indicated. On the dotted line next to
Line 32, enter the amount of your deduction and identify it as indicated.
- Performing-arts-related expenses (see Form 2106 or
2106-EZ). Identify as
- Jury duty pay given to your employer (see Pub. 525). Identify as “Jury Pay.”
- Deductible expenses related to income reported on Line 21 from the
rental of personal property engaged in for profit. Identify as “PPR.”
- Reforestation amortization (see Pub.
535). Identify as “RFST.”
- Repayment of supplemental unemployment benefits under the Trade Act of 1974
(see Pub. 525). Identify as “Sub-Pay TRA.”
- Contributions to section 501(c)(18) pension plans (see Pub. 575). Identify as
- Contributions by certain chaplains to section 403(b) plans (see Pub. 517).
Identify as "403(b)."
- Deduction for clean-fuel vehicles (see Pub.
535). Identify as “Clean-Fuel.”
- Employee business expenses of fee-basis state or local government officials (see
Form 2106 or
2106-EZ). Identify as “FBO.”
If line 33 is less than zero, you may have a net operating loss that
you can carry to another tax year. See Pub. 536.
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