H and R Block 2002 Income Tax Guide : Preparing America's Taxes for Over 45 Years

by H&R Block

Edition:

1st

ISBN13:

9780743204415

ISBN10:

0743204417

Format:

Paperback

Pub. Date:

2/5/2002

Publisher(s):

Fireside

Other versions by this Author

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Summary

For over forty-five years H&R Block, the world's largest tax preparer, has been helping you and your family file the best tax return possible. The H&R Block 2002 Income Tax Guide will show you how to take advantage of the latest tax laws to save even more money. H&R Block's Special Features Block's Tax Organizer to help you get started Special Tax Planning Worksheets to help you save $$$ Answers to the most asked questions about federal tax returns Charts, tables, examples, and tips for information at a glance Directory of Special Topics to help pinpoint areas of concern for you and your family Encyclopedia of Tax:A through Z answers to tax problems, questions, and issues Sample federal tax forms 2002 Tax Calendar: important dates to help you keep track of next year's deadlines As always, Block's tax professionals provide the most concise and comprehensive answers to all your questions, such as How will tax law changes and rulings affect me, my family, and my business? How will a change in filing status affect my return this year? What is the best way to use my business deductions? How should I respond if my return is questioned by the IRS? Now you can also take advantage of these bonus features! $10 OFF tax preparation and electronic filing at participating H&R Block offices Personal answers to your tax questions: call your local H&R Block office www.hrblock.com We invite you to visit our one-stop Website For information on how the latest tax laws affect you To complete a quick questionnaire and let our Refund Calculator estimate your refund For tax tips that may save you dollars To locate the nearest H&R Block tax office in your zip code area

Directory of Tables and Illustrated Forms

Directory of Special Topics

Foreword: The Form 1040 Family

(1)

Finding Information in Your Guide

(1)

How to Use Your Guide

(1)

Commonly Asked Tax Questions

(2)

Line-by-Line Overview of Form 1040

(2)

A Look at the Current Tax Scene

(12)

What's New for 2001

(2)

Looking Ahead to 2002

(4)

Tried and True Tax-Saving Ideas

(1)

Most Overlooked Deductions

(2)

Filled-In Form 1040

(4)

I. Taking Time to Organize

(18)

Chart: Where to File Your Return

(1)

Determine If You Must File a Tax Return

Gross Income Filing Requirements

(2)

Other Filing Requirements

(1)

Filing Requirements of Foreign Nationals

(1)

Decide Which Form to File

Form 1040EZ

(1)

Form 1040A

(1)

Form 1040

(1)

Form 1040NR

(2)

Prepare and File Your Tax Return

Step 1: Gather Your Tax Data

(3)

Step 2: Set Up Your Worksheets

(1)

Step 3: Complete Your Tax Forms

(1)

Step 4: Review and Check Your Work

(1)

File Your Tax Return

(4)

II. Getting Started on Form 1040

(20)

Chart: Qualifying a Dependent

(1)

Fill in the Heading Completely and Accurately

Heading Information

(2)

Presidential Election Campaign Fund

(1)

Use the Most Favorable Filing Status

Your Marital Status

(1)

Married Taxpayers

(1)

Married Filing Jointly

(1)

Married Filing Separately

(1)

Married, Qualifying as Unmarried

(1)

Unmarried Taxpayers

(3)

Single

(1)

Head of Household

(1)

Widow(er) With Dependent Child

(1)

Flowchart: What Filing Status Should I Use?

(2)

Claim All of Your Personal and Dependent Exemptions

Personal Exemptions

(1)

Exemptions for Dependents

(7)

Test 1: Gross Income

(1)

Test 2: Support

(3)

Test 3: Member of Household or Relationship

(1)

Test 4: Citizenship or Residence

(1)

Test 5: Joint Return

(1)

Filled-In Dependency Support Worksheet

(2)

III. Reporting Your Income On Form 1040

(98)

Chart: Where to Report W-2, 1098, and 1099 Items

(1)

Wages, Tips, and Other Compensation

Employee Compensation

(5)

Your Form W-2, Box by Box

(3)

Figuring Your Wages and Withholding

(1)

Tip Income

(1)

Interest Income

Form 1099-INT

(1)

Deposit Arrangements

(1)

U.S. Savings Bonds

(1)

Other Bond Interest

(1)

Unstated Interest

(1)

Exempt Interest

(1)

Reporting Interest on Schedule B

(1)

Dividends

Form 1099-DIV

(1)

Ordinary Dividends

(1)

Capital Gain Distributions

(1)

Nontaxable Distributions

(1)

Liquidation Distributions

(1)

Stock Dividends and Rights

(1)

Nondividend Dividends

(1)

Reporting Dividends on Schedule B

(1)

State and Local Income Tax Refunds

Form 1099-G

(1)

State and Local Tax Refunds

(1)

Filled-In State and Local Income Tax Refund Worksheet

(1)

Alimony Received

(1)

Agreements Made or Modified After 1984

(1)

Pre-1985 Agreements

(1)

Child Support

(1)

Other Payments That Are Not Alimony

(1)

Business Income or Loss

Schedule C-EZ

(1)

Net Business Loss

(1)

Completing Schedule C

(4)

Self-Employment Tax

(1)

Information Returns

(1)

Filled-In Schedule C

(4)

Gains or Losses I

Reporting Sales and Exchanges

101

(6)

Bad Debts

107

(1)

Sales and Exchanges of Securities

108

(3)

Schedule-D Transactions

111

(1)

Sale of Your Home

112

(2)

Filled-In Schedule D

114

(1)

Gains or Losses II

Selling Business Property

115

(3)

Like-Kind Exchanges

118

(1)

Filled-In Form 4797

119

(3)

Installment Sales

122

(1)

Filled-In Form 8824

123

(2)

Involuntary Conversions

125

(1)

Filled-In Form 6252

126

(3)

Filled-In Form 4684, Section B

129

(1)

Flowchart: How to Use Form 4797 and Schedule D

130

(1)

Income From Retirement Plans

Reporting Retirement Income

131

(2)

Form 1099-R

132

(1)

Penalty Taxes

133

(1)

Distributions From Traditional IRAs

134

(2)

Pensions and Annuities

136

(1)

Lump-Sum Distributions

137

(1)

Rollovers Between Retirement Plans

137

(1)

Distributions From Employer Plans

137

(1)

Distributions From Roth IRAs

138

(1)

Distributions From Coverdell Education Savings Accounts

139

(1)

Rents, Royalities, and Other Schedule E Income

Rents

140

(5)

Gross Rental Income

141

(1)

Rental Expenses

141

(3)

Checklist of Rental Expenses

144

(1)

Royalties

145

(1)

Partnership Income

145

(1)

S Corporation Income

146

(1)

Estate and Trust Income

146

(1)

At-Risk Limitations

146

(1)

Passive Loss Limitations

146

(1)

Real Estate Mortgage Investment Conduits

146

(2)

Filled-In Worksheet for Supplemental Income

148

(1)

Filled-In Schedule E

149

(3)

Farm Income or Loss

Completing Schedule F

152

(3)

Farm Income

152

(2)

Farm Expenses

154

(1)

Completing Form 4835

155

(1)

Self-Employment Tax

155

(1)

Estimated Tax

155

(1)

Filled-In Schedules F and SE

156

(1)

Unemployment Compensation

Government Programs

157

(1)

Supplemental Unemployment Benefits

158

(1)

Other Types of Unemployment Benefits

158

(1)

Social Security and Tier 1 Railroad Retirement Benefits

Form SSA-1099

159

(1)

Amount of Taxable Benefits

160

(1)

Lump-Sum Payments

160

(1)

Filled-In Social Security Worksheet

161

(1)

Other Income

Taxable Other Income

162

(3)

Exempt or Excludable Income

165

(4)

IV. Deductions Related to Business, Rentals, or Employment

169

(36)

Flowchart: Can You Deduct Home-Office Expenses?

170

(1)

Depreciation and Amortization

Depreciable Property

171

(1)

MACRS Property

172

(6)

Listed Property

175

(1)

Section 179 Expense Deduction

175

(3)

Other Depreciable Property

178

(1)

ACRS Property

179

(1)

Amortization

180

(1)

Filled-In Form 4562

181

(1)

Class Lives and Recovery Periods Tables

182

(2)

MACRS Percentages Tables

184

(4)

ACRS Percentages Tables

188

(1)

Inclusion Amount Tables

189

(1)

Travel, Transportation, and Education Expenses

Travel Expenses

190

(2)

Meal and Entertainment Expenses

192

(1)

Gifts

193

(1)

Transportation Expenses

194

(4)

Records of Business Expenses

198

(1)

Education Expenses

198

(2)

Business Use of Your Home

Qualifying for a Home-Office Deduction

200

(1)

Computing Your Home-Office Deduction

201

(1)

Where to Deduct Home-Office Expenses

202

(2)

Filled-In Form 8829

204

(1)

V. Adjustments to Income

205

(26)

List of Adjustments to Income

206

(1)

Your Individual Retirement Arrangement (IRA)

Traditional IRAs

207

(2)

When to Contribute

208

(1)

Contribution Limits

208

(1)

Deductible Contributions

208

(1)

Roth IRAs

209

(1)

Nondeductible Contributions to a Traditional IRA

210

(2)

Rollovers

212

(1)

Which IRA Option Is Right for Me?

213

(1)

Converting a Traditional IRA to a Roth IRA

213

(2)

Deduction for Student Loan Interest

How to Claim the Deduction

215

(1)

Qualified Student Loan

215

(1)

Deduction Limits

216

(1)

Medical Savings Accounts

217

(2)

Eligibility

217

(1)

Contributions

217

(1)

Distributions

218

(1)

Form 1099-MSA

218

(1)

Form 8853

218

(1)

Moving Expenses

Moving Expense Requirements

219

(2)

When to Deduct Moving Expenses

221

(1)

Identifying Your Deductible Moving Expenses

222

(1)

Adjustments for the Self-Employed

Self-Employment Tax Deduction

223

(1)

Self-Employed Health Insurance Deduction

223

(1)

Self-Employed Retirement Plans

224

(3)

Keogh Plans

224

(2)

Simplified Employee Pension (SEP)

226

(1)

SIMPLE Plans

226

(1)

Penalty Tax on Excess Contributions

226

(1)

Other Adjustments to Income

Penalty on Early Withdrawal of Savings

227

(1)

Alimony Deduction

227

(2)

Performing Artists' Expenses

229

(1)

Fee-Basis Government Officials

229

(1)

Jury Duty Fees

229

(1)

Reforestation Expenses

229

(1)

Supplemental Unemployment

229

(1)

Section 501(c)(18) Pension Plans

229

(1)

Clean-Burning Fuel Vehicles

229

(1)

Personal Property Rental Expenses

230

(1)

VI. Itemized Deductions on Schedule A

231

(32)

List of Itemized Deductions

232

(2)

Medical and Dental Expenses

Computing Deductible Medical Expenses

234

(2)

Reimbursements of Health-Care Expenses

236

(1)

Nondeductible Health-Care Expenses

236

(1)

Checklist of Deductible Medical and Dental Expenses

237

(1)

Checklist of Nondeductible Medical Expenses

238

(1)

Taxes You Paid

State and Local Income Taxes

239

(1)

State, Local and Foreign Real Estate Taxes

240

(1)

Personal Property Taxes

240

(1)

Other Taxes

240

(1)

Checklist of Nondeductible Taxes

240

(1)

Interest You Paid

Qualified Residence Interest

241

(2)

Investment Interest

243

(1)

Nondeductible Interest

244

(1)

Filled-In Form 4952

245

(1)

Gifts to Charity

Reporting Your Contributions

246

(1)

Qualified Organizations

246

(1)

Special Types of Charitable Contributions

247

(1)

Contributions of Property

248

(1)

Limits on Charitable Deductions

249

(1)

Nondeductible Contributions

250

(1)

Recordkeeping for Contributions

251

(1)

Casualty and Theft Losses

Casualties and Thefts Defined

252

(1)

The Amount of Casualty or Theft Loss

253

(1)

Evidence of Casualty or Theft

254

(1)

Valuation of Property

254

(1)

When to Deduct a Casualty or Theft Loss

254

(1)

Disaster Area Losses

254

(1)

Form 4684, Section A

254

(3)

Miscellaneous Deductions

Limited Deductible Items

257

(3)

Employee Business Expenses

257

(3)

Income Tax Determination Expenses

260

(1)

Investment Expenses

260

(1)

Fully Deductible Items

260

(1)

Total Itemized Deductions

261

(1)

Filled-In Form 2106

262

(1)

VII. Your Tax Computation

263

(18)

Tax Computation Flowchart

264

(1)

Figuring Your Taxable Income

Taxable Income

265

(1)

Standard Deduction

266

(1)

Itemized Deductions

267

(1)

Exemptions

268

(1)

Computing Your Tax

Using the Tax Table

269

(1)

Using the Tax Rate Schedules

269

(1)

Filled-In Form 1040, Page 2

270

(1)

Using the Capital Gain Tax Worksheet

271

(1)

Using Schedule D and the Schedule D Tax Worksheet

271

(1)

Special Situations

272

(1)

Child Under Age 14: Tax Computation

272

(1)

Filled-In Form 8814

273

(1)

Filled-In Form 8615

273

(1)

Farm Income Averaging

274

(1)

Ten-Year Averaging and Capital Gain Elections

275

(2)

Alternative Minimum Tax

Form 6251 Filing Requirements

277

(1)

Completing form 6251

278

(3)

VIII. Limited Tax Credits

281

(36)

Flowchart: Qualifying for the Child- and Dependent-Care Credit

282

(1)

Foreign Tax Credit

Qualifications to Claim the Credit

283

(2)

Form 1116

285

(1)

Credit for Child- and Dependent-Care Expenses

Qualifications to Claim the Credit

286

(2)

Qualifying Expenses

288

(1)

Identification Requirements

289

(1)

Computing the Credit

289

(2)

Dependent-Care Benefits

291

(1)

Filled-In Forms 2441

292

(2)

Credit for the Elderly or the Disabled

Qualified Individual

294

(1)

Income Limits

295

(1)

Computing the Credit

295

(2)

Filled-In Schedule R

297

(1)

Education Credits

Rules That Apply to Both Credits

298

(1)

Hope Credit

299

(1)

Lifetime Learning Credit

300

(1)

Credit Phaseout

300

(1)

Filled-In Form 8863

301

(1)

Child Tax Credit

The Child Tax Credit

302

(3)

Qualifying for the Credit

302

(1)

Calculating the Credit

303

(1)

Filled-In Child Tax Credit Worksheet

304

(1)

Adoption Credit

When to Claim the Credit

305

(1)

Qualified Expenses

305

(1)

Eligible Child

306

(1)

Amount of the Credit

306

(1)

Form W-7A

307

(1)

Filled-in Form 8839

308

(1)

Other Credits

Rate Reduction Credit

309

(1)

General Business Credit

310

(4)

Mortgage Interest Credit

314

(1)

Credit for Prior-Year AMT

315

(1)

Electric Vehicle Credit

315

(1)

Nonconventional Source Fuel Credit

315

(2)

IX. Other Taxes, Payments, and Refund or Amount You Owe

317

(26)

Your Rights as a Taxpayer

318

(1)

Self-Employment Tax

Self-Employment Income

319

(1)

Social Security and Medicare Tax Rates

320

(1)

Schedule SE

320

(1)

Filled-In Schedule SE

321

(1)

Optional Methods of Computing Your Self-Employment Tax

322

(1)

Payroll Taxes for Your Household Employees

Household Employee Defined

323

(1)

Wages Paid to Household Employees

323

(1)

Schedule H, Household Employment Taxes

324

(2)

Filled-In Schedule H

326

(1)

Various Other Taxes

Social Security and Medicare Tax on Unreported Tips

327

(1)

Retirement Plan Taxes

327

(3)

Advance Earned Income Credit

330

(1)

Write-In Taxes

330

(2)

Earned Income Credit and the Additional Child Tax Credit

Earned Income Credit

332

(3)

Additional Child Tax Credit

335

(1)

Filled-In Child Tax Credit Worksheets

336

(1)

Filled-In EIC Worksheet

336

(1)

Filled-In Schedule EIC

337

(1)

Filled-In Form 8812

337

(2)

Tax Payments and Refund or Amount You Owe

Total Federal Income Tax Withheld

339

(1)

Estimated Income Tax Payments

339

(1)

Excess Social Security Tax

339

(1)

Amount Paid With Extension Request

339

(1)

Other Refundable Credits

339

(1)

Total Tax Payments

340

(1)

Refund or Balance Due

340

(1)

Sign Your Return

340

(1)

Underpayment of Estimated Tax

341

(2)

X. Your Advance Tax Payments

343

(10)

Calendar of 2002 Tax Dates

344

(1)

Planning Your Withholding for 2002 Taxes

Form W-4

345

(2)

Withholding Allowances

346

(1)

Form W-4P

347

(1)

Form W4-S

347

(1)

Form W-4V

347

(1)

Filled-In Form W-4

348

(1)

Planning Your 2002 Estimated Tax Payments

Estimated Tax Requirements

349

(1)

Farmers and Fishers

350

(1)

How to Pay Estimated Tax

350

(1)

Filled-In Form 1040-ES Voucher

351

(1)

Filled-In 2002 Estimated Tax Worksheet

352

(1)

XI. The Short Forms

353

(8)

Filled-In Form 1040EZ

354

(1)

Form 1040EZ and Form 1040A

Form 1040EZ

355

(1)

Form 1040A

355

(4)

Filled-In Form 1040A

359

(2)

XII. Tax Planning Ideas for Now and the Future

361

(20)

Your Rights as a Taxpayer, Continued

362

(1)

After You File Your Return

Common-Sense Recordkeeping

363

(2)

Amending Your Tax Return

365

(1)

Dealing With the IRS

366

(3)

Filled-In Form 1040X

369

(1)

Tax Topics of Special Interest

Tax Planning Throughout the Year

370

(3)

Your Children and the Tax Laws

373

(4)

Tax Consequences of Divorce

377

(2)

Gift and Estate Tax Essentials

Gift Tax

379

(1)

The Unified Credit

380

(1)

Generation-Skipping Transfer Tax

380

(1)

Estate Tax

380

(1)

XIII. An Encyclopedia of Tax

381

(72)

Allocated Tips

381

(1)

Barter Transactions

381

(1)

Basis of Property

382

(5)

Business and Passive Activity Topics

387

(14)

Asset Acquisition Costs

388

(1)

Business Versus Hobby

388

(2)

Changing Depreciation Accounting

390

(1)

Employee versus Self-Employed

390

(1)

Information Reporting Requirements

391

(3)

Limitation on Losses and Credits

394

(4)

Net Operating Loss (NOL)

398

(3)

Child-Care Providers

401

(1)

Clergy: Special Tax Rules

401

(1)

Community Property States

402

(1)

Creative Works, Expenses of

403

(1)

Fishing, Business of

403

(2)

Foreclosure and Debt Discharge, Income From

405

(4)

Foreign Issues of U.S. Taxation

409

(7)

Foreign Earned Income, Exclusion of

409

(2)

Foreign National: Departing the United States

411

(1)

Foreign National: Dependent of U.S. Taxpayer

411

(1)

Foreign National: U.S. Resident or Nonresident

411

(2)

Foreign National: U.S. Taxation of Nonresident or Dual-Status Alien

413

(1)

U.S. Income Tax Treaties

414

(1)

U.S. Possessions Income

415

(1)

Installment Sales

416

(4)

Internal Revenue Service

420

(5)

Recent Changes at the IRS

420

(1)

Innocent Spouse Relief

421

(1)

Interest: Abatement Due to IRS Error

421

(1)

Nonfiler Program

422

(1)

Injured Spouse

422

(1)

Statute of Limitations for Assessments and Refunds

423

(1)

Tax-Related Penalties

423

(2)

Low-Income Housing Credit

425

(1)

Medical Expenses: Individuals With Handicaps

425

(1)

Military Personnel

426

(2)

Natural Resources Topics

428

(3)

Depletion: Gas, Oil, and Mineral Property

428

(2)

Depletion: Timber Property

430

(1)

Gas and Oil: Intangible Drilling Costs

430

(1)

Reforestation Expenditures

430

(1)

Partnership Schedule K-1

431

(1)

Repayment of Previously Reported Income

432

(1)

Repossession of Property

432

(3)

General Rule for Repossessions

432

(1)

Repossession of Principal Residence

433

(1)

Repossession of Qualified Real Property

434

(1)

Retirement Plans, Important Details

435

(6)

Annuity in Exchange for Property

435

(1)

Keogh Plans

436

(2)

Section 401(k) Plans

438

(1)

Simplified Employee Pension Plans

439

(1)

Saving Incentive Match Plan for Employees (SIMPLE)

440

(1)

Tax-Sheltered Annuities

440

(1)

Royalties, Classification of

441

(1)

Shared-Equity Agreements

442

(1)

State Tax Returns: Jurisdiction

442

(1)

Statutory Employee

443

(1)

Stocks and Other Securities

443

(10)

Bonds

444

(3)

Mutual Funds

447

(1)

Mortgaged-Backed Securities

448

(1)

Unit Investment Trusts

448

(1)

REMICs and Other Collateralized Debt Obligations

448

(1)

Real Estate Investment Trusts (REITs)

449

(1)

Short Sales

449

(1)

Options and Commodities Trading

449

(3)

Worthless Section 1242 or 1244 Stock

452

(1)

XIV. A Glossary of Tax Terms

453

(12)

XV. Tax Tables, Worksheets, and Tax Forms

465

(98)

Self-Interview Tax Data Organizer

467

(6)

2001 Tax Table

473

(12)

2001 Tax Rate Schedules

485

(1)

Tax Computation Worksheet for Certain Dependents

486

(1)

Capital Gain Tax Worksheet

486

(1)

Form 1040EZ

487

(2)

Form 1040A

489

(2)

Schedule 1, Interest and Dividend Income for From 1040A Filers

491

(2)

Schedule 2, Child-or Dependent-Care Expenses for Form 1040A Filers

493

(2)

Form 1040, U.S. Individual Income Tax Return

495

(2)

Schedule A, Itemized Deductions

497

(1)

Schedule B, Interest and Ordinary Dividends

498

(1)

Schedule C, Profit or Loss From Business

499

(2)

Principal Business or Professional Activity Codes

501

(2)

Schedule D, Capital Gains and Losses

503

(2)

Schedule E, Supplemental Income and Loss

505

(2)

Schedule EIC, Earned Income Credit

507

(2)

Schedule F, Profit or Loss From Farming

509

(2)

Schedule H, Household Employment Taxes

511

(2)

Schedule SE, Self-Employment Tax

513

(2)

Form 1116, Foreign Tax Credit

515

(2)

Form 2106, Employee Business Expenses

517

(2)

Form 2441, Child and Dependent Care Expenses

519

(2)

Form 3903, Moving Expenses

521

(2)

Form 4562, Depreciation/Amortization

523

(2)

Form 4684, Casualties and Thefts

525

(2)

Form 4797, Sales of Business Property

527

(2)

Form 6251, AMT-Individuals

529

(2)

Form 8606, Nondeductible IRAs

531

(2)

Form 8615, Tax for Children Under Age 14, Who Have Investment Income of More Than $1,500

533

(2)

Form 8812, Additional Child Tax Credit

535

(2)

Form 8829, Expenses for Business Use of Your Home

537

(2)

Form 8839, Qualified Adoption Expenses

539

(2)

Form 8863, Education Credits

541

(2)

Head of Household Worksheet

543

(1)

Expenses of Maintaining a Home

543

(1)

Dependency Support Worksheet

544

(1)

Record of Salaries and Wages From Several Employers

545

(1)

Pension/Annuity Worksheet

545

(1)

Taxable Recovery of Previously Deducted Amount Worksheet

546

(1)

Taxable Social Security/Equivalent Tier 1 RR Benefits Worksheet

547

(1)

2001 Inclusion Amounts for Leased Automobiles

548

(1)

Statement of Business Use of Home

549

(1)

Depreciation Worksheet-All Methods

550

(1)

IRA Contribution and Deduction Worksheet

551

(2)

Itemized Deduction Limitation Worksheet

553

(1)

Exemption Limitation Worksheet

553

(1)

Schedule D Tax Worksheet

554

(1)

Child Tax Credit Worksheets

555

(2)

Earned Income Credit Worksheet

557

(1)

Earned Income Credit Table

558

(3)

Capital Loss Carryover Worksheet

561

(1)

2002 Estimated Tax Worksheet

562

(1)

Index

563

H and R Block 2002 Income Tax Guide : Preparing America's Taxes for Over 45 Years

9780743204415

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Table of Contents