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Overview of the Job Creation and Worker Assistance Act of 2002 |
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Page 3 |
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Another temporary rule provides an incentive for educators to retain receipts of their out-of-pocket classroom expenses in 2002 and 2003. The rule permits an "above-the-line" deduction (i.e., not subject to the 2% limitation on miscellaneous itemized deductions) of up to $250 for books, supplies, equipment, and related items purchased for classroom use. The rule applies to kindergarten-through-grade-12 teachers, instructors, counselors, principals, or aides in a school for at least 900 hours during a school year.
The new law extends the Archer Medical Savings Account ("MSA") program through December 31, 2003. The provision is intended to benefit individuals covered only by high-premium health plans. It permits, within certain limits, a deduction for amounts set aside by or for eligible individuals, the tax-free build-up of the fund, and tax-free distributions of amounts used for medical purposes.
Among other changes, the new law also: • Extends the 10% credit for the cost of a qualified electric vehicle. The maximum credit available for purchases made in 2002 and 2003 is $4,000. • Broadens the category of payments that foster care providers may exclude from income. • Provides technical clarifications to the rules governing the adoption credit, education IRAs (now known as "Coverdell Education Savings Accounts"), and the dependent care credit.
As noted at the beginning of this letter, our purpose here was to alert you to some of the more significant provisions of the new law. Please feel free to call our office with any questions or to arrange an appointment to discuss how the new law may affect your tax planning strategies.
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