How about some good news about completing your 2002 tax return? The IRS has made it easier to report interest and dividend income. How easy? If you're under certain dollar limits, you'll no longer have to report the details of your interest and dividend income. That means one less form to file.
The new threshold
A recent IRS news release (IR-2002-102) announced that for 2002 tax returns, taxpayers won't have to file a separate "Interest and Dividend" statement if the amount of either interest or dividend income is $1,500 or less. If your interest or dividend income is $1,500 or less, you can simply report that information on the front of your tax return, without being required to complete the separate detailed schedule (Schedule B for Form 1040 filers, and Schedule 1 for Form 1040A filers).
The old reporting threshold was $400, which had been in place since 1974. If your interest or dividends amounted to $400 or more, you would have to complete a separate "backup" schedule and attach that additional form to your tax return. This change will eliminate that additional form. And, in the "even better" news department, this is a change that the IRS can (and did) institute unilaterally, without the approval of Congress or the president. So we don't have to worry about the politicos muckin' it up.
What does this mean for you?
It'll mean different things to different people.
- If your interest and/or dividend income is greater than $1,500, there will be no change for you. You'll continue to file either Schedule B (with your Form 1040), or Schedule 1 (with your Form 1040A).
- If your interest and/or dividend income is less than $1,500, you'll not have to file either Schedule B or Schedule 1. And that could potentially lead to other good news for you. The IRS estimates that an additional 800,000 taxpayers will be able to use the even easier Form 1040EZ or TeleFile. Since you're unable to file Form 1040EZ or TeleFile if you're required to detail your interest or dividend income, this change will allow many more taxpayers the ability to use an easier form to file their tax returns.
But remember, as in the past, if you have some money squirreled away in a foreign bank account, or if you're involved in foreign trust transactions, you'll still be required to File Schedule B. And this is true regardless of the amount of other interest or dividend amounts that you are required to report.
New mileage rates
In other news, the IRS has also announced changes to the standard mileage rates for tax year 2003 (IR-2002-100). The new rates for 2003 have either remained the same or have been reduced. These standard mileage rates for business, medical, and moving purposes are based on an annual study of the fixed and variable costs of operating an auto, which is conducted by an independent non-governmental agency. The primary reason for the mileage rate decreases is the decline in fuel prices during the study period that ended June 30. The charitable standard mileage rate is set by law, and can only be changed by an act of Congress. The new rates are as follows:
- The standard mileage rate for the business use of an auto is 36 cents per mile in 2003, down from 36.5 cents per mile in 2002.
- The standard mileage rate for the use of a car when providing services to a charitable organization remains at 14 cents per mile in 2003.
- The standard mileage rate for the use of a car for medical reasons is 12 cents per mile in 2003, down from 13 cents pre mile in 2002.
- The standard mileage rate to use when computing deductible moving expenses for 2003 is 12 cents per mile, down from 13 cents per mile in 2002.
So keep all of these changes in mind, not only when you're preparing your 2002 individual income tax returns a few months from now, but also when you turn the on the ignition key and use your vehicle for some IRS-authorized deductible purpose.
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