 | TAXES AND ACCOUNTING
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Article written by Gatto McFerson that appeared in the Pulse
– December 2002
Tax Planning Time
By Tom A. McFerson, CPA
As 2002 winds to a close, it’s time to consider some
planning steps that may help lower your tax bite come next
April. Some areas to think about:
Contributions to Individual Retirement Plans have been increased
again this year, to $3,000. Also, taxpayers who are older
than 50 may be eligible for additional “catch up”
contributions, depending on their income levels. This would
allow people who are behind in their retirement savings to
contribute an additional $500 in year 2002, making their total
IRA contribution $3,500.
SIMPLE IRA Plan contributions have been increased as well,
to $7,000 in 2002. Again, certain taxpayers over 50 may be
eligible to contribute an extra $500.
Maximum contributions made to 401K plans have also been increased.
For 2002, the contribution limit is $11,000. Again, there
is a “catch-up” provision for taxpayers over the
age of 50.
The rules for higher education expenses have been changed
for the better. You may now be able to deduct on page one
of your 1040 up to $3,000 of qualified tuition and related
expenses. These expenses can be for you, your spouse, or your
dependent.
One other change in the tax law you should be concerned about:
estimated tax requirements. If your 2001 adjusted gross income
was more than $150,000, this year you will have to pay the
smaller of 90% of your expected 2002 tax, or 112% of your
2001 tax to avoid an estimated tax penalty.
Tom McFerson, CPA, ABV is a partner in Gatto McFerson, CPA’s
in Santa Monica, California. He can be reached at (310) 393-2434
or at tom@gattomcferson.com.
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Copyright © 1999-2003 Gatto McFerson
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