Reduced Tax Rates. Most of the tax rates will decrease by 1/2% and a new 10% tax rate will apply to all filers.
New Deduction for Higher Education Expenses. You may be able to deduct up to $3,000 of the qualified education expenses you pay for yourself, your spouse, or your dependents if your 2002 modified AGI is $130,000 or less.
New Credit for Elective Deferrals and IRA Contributions. You may be able to take a credit of up to $1,000 for qualified retirement savings contributions if your 2002 modified AGI is $50,000 or less.
IRA Deduction Expanded.You, and your spouse if filing jointly, may be able to take an IRA deduction of up to $3,000 ($3,500 if you will be age 50 or older at the end of 2002). If you are covered by a retirement plan, you may be able to take an IRA deduction if your 2002 modified AGI is less than $44,000 ($64,000 if married filing jointly or qualifying widow(er)).
Student Loan Interest Deduction. The 60-month limit will no longer apply and the modified AGI limit will increase.
Self-Employed Health Insurance Deduction. You may be able to deduct up to 70% of your health insurance expenses.
Adoption Credit. You may be able to take a credit of up to $10,000 for the qualified adoption expenses you pay to adopt a child.
EIC Computation Simplified. Nontaxable earned income and modified AGI will not be taken into account in determining if you are eligible for the credit or the amount of your credit.
Coverdell ESAs. You may be able to contribute up to $2,000 to a Coverdell ESA.
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