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Over 100 million users of EBay services regularly buy and sell items each year. But how do you treat the activity on your tax return?
Deductions for Non-Itemizers
Deductions for Non-Itemizers
A common misconception in tax filing has been that if you use the standard deduction versus itemized deductions you have little additional deductions available to reduce your taxes. This is often not the case.
Usually you itemize if allowable deductions (like mortgage interest, property taxes, charitable giving, medical expenses and other deductions) exceed your standard deduction (see chart), but today there are numerous tax deduction opportunities for non-itemizers. Some of the most common are:
Standard Deduction for 2003 |
| Married Filing Jointly | $9,500 |
| Single Filer | $4,750 |
| Head of Household | $7,000 |
| Married Filing Separately | $3,975 |
• IRA Contributions (up to $3,000 per person or $3,500 if age 50 or over)
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%09%09%09• Student Loan Interest (up to $2,500)
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%09%09%09• Tuition and Fees deduction (up to $3,000)
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%09%09%09• Educator Expense deduction (up to $250)
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%09%09%09• Alimony Paid
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%09%09%09• Medical Savings Account Contributions
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%09%09%09• Moving Expenses for job related moves
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%09%09%09• Professional Gambler losses
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%09%09%09• 100% of self-employed health insurance premiums
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%09%09%09• Self-employed SEP, SIMPLE and qualified retirement plan contributions
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%09%09%09• 1/2 of self-employment tax
%09%09%09Income limitations often apply. But for those who qualify, the tax savings can be significant. Also recall that in addition to the above deductions, there are numerous tax credits that can reduce your tax obligation even further.
Key Exemptions
Key 2002 Exemptions and Deductions
Personal Exemptions – The personal exemption for each qualifying dependent increased by $100 for 2002.
| 2002 | 2001 |
Exemption | $3,000 | $2,900 |
The exemption is phased out by 2% for each $2,500 ($1,250 for married filing separately) by which income is over:
2002 Phase Out |
| Single | $137,300 |
| Married Filing Separately | $103,000 |
| Married Filing Jointly | $206,000 |
Head of Household | $171,650 |
Standard Deductions – The new standard deductions for those who do not itemize are as follows:
| 2002 | 2001 |
| Married Filing Jointly | $7,850 | $7,600 |
| Single | $4,700 | $4,550 |
| Head of Household | $6,900 | $6,650 |
Married Filing Separately | $3,925 | $3,800 |
If 65 or over and/or blind add:
| 2002 | 2001 |
| Single/Head of Household | $1,150 | $1,100 |
| Married/Surviving Spouse | $900 | $900 |
Itemized Deduction Phaseout – Deductions are reduced by 3% of every dollar of Adjusted Gross Income (AGI) over $137,300 ($68,650 if married filing separately) up to a maximum phaseout of 80% of your itemized deductions. Your medical expenses, investment interest, casualty losses and gambling losses are excluded.
Standard Mileage Rates – The standard mileage rates for 2002 are:
Mileage | 2001 Rate/Mile |
| Business Travel | 36.5¢ |
| Charitable Work | 14.0¢ |
| Medical/Moving | 13.0¢ |
Social Security Tax Rates –
- The Social Security/Medicare tax rates remain unchanged for 2002 at 7.65% and 15.3% for employed and self-employed, respectively. The Earnings base increases from $80,400 in 2001 to $84,900 in 2002.
Earning Limits:
- Recipients age 65 and over can earn an unlimited amount in 2002 without having benefits reduced.
- Individuals age 62 to 64 can earn $11,280 in 2002, up $600 over 2001, before benefits are reduced. Earnings over $11,280 result in lost benefits of $1.00 for every $2.00 earned.
