Important Changes for 2002

The following items highlight a number of administrative and tax law changes for 2002. More information on these and other changes can be found in Publication 553, Highlights of 2001 Tax Changes.

Maximum net earnings for self-employment tax. The maximum net self-employment earnings subject to the social security part of the self-employment tax for 2002 will be published in Publications 533 and 553. There is no maximum limit on earnings subject to the Medicare part.

Wage limits for social security and Medicare taxes. The maximum wages subject to the social security tax for 2002 will be published in Publication 51, Circular A, Agricultural Employer's Tax Guide. There is no limit on wages subject to the Medicare tax.

Self-employed health insurance deduction. The part of your self-employed health insurance premiums you can deduct as an adjustment to income is 70% for 2002. See chapter 5.

Retirement plans. Many changes to the tax laws for retirement plans were made by the Economic Growth and Tax Relief Reconciliation Act of 2001 that was enacted on June 7, 2001. However, most of those changes do not take effect until after December 31, 2001, and are not covered in this publication. For information about those changes, see Publication 560, Retirement Plans for Small Business, or Publication 553, Highlights of 2001 Tax Changes.

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