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i1040 instru - Note This booklet does not contain any tax...

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Note. This booklet does not contain any tax forms. Department of the Treasury Internal Revenue Service www.irs.gov 1040 Including Instructions for Schedules A, B, C, D, E, F, J, and SE Cat. No. 11325E 2002 Instructions The Internal Revenue Service Working to put service first Tax Rates Reduced Again! Most of the tax rates have been reduced. Also, all taxpayers are now eligible for the 10% rate. See page 16. IRA Deduction Increased! The maximum IRA deduction has increased to $3,000 ($3,500 if you were 50 or older in 2002). See page 16. New Tuition and Fees Deduction! You may be able to deduct up to $3,000 of the tuition and fees you paid in 2002. See page 16. New Retirement Savings Contributions Credit! You may be able to take a credit of up to $1,000 for qualified retirement savings contributions. See page 16. New Deduction For Educators! You may be able to deduct up to $250 of expenses. See page 16. Earned Income Credit Simplified! Nontaxable earned income and modified adjusted gross income are no longer used to figure the credit. See page 16. Search http://www.irs.gov/ Search http://www.irs.gov/ IRS.gov IRS.gov Home For details, see page 3 or go to www.irs.gov. New—Free Internet Filing Options! IRS e-file ...... A Quick, Easy, Smart way to get your taxes where you want them to be— Done! Schedule B—Fewer People Have To File! See page 16. Sch B
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- 2 - Major Categories of Federal Income and Outlays for Fiscal Year 2001 Income and Outlays. These pie charts show the relative sizes of the major categories of Federal income and outlays for fiscal year 2001. Income Outlays Personal income taxes 50% Excise, customs, estate, gift, and miscellaneous taxes 8% Corporate income taxes 7% Social security, Medicare, and unemployment and other retirement taxes 35% Law enforcement and general government 2% Social security, Medicare, and other retirement 1 36% National defense, veterans, and foreign affairs 2 18% Net interest on the debt 10% Physical, human, and community development 3 10% Social programs 4 18% Surplus to pay down the debt 6% On or before the first Monday in February of each year, the President is required by law to submit to the Congress a budget proposal for the fiscal year that begins the following October. The budget plan sets forth the President’s proposed receipts, spending, and the surplus or deficit for the Federal Government. The plan includes recommendations for new legislation as well as recom- mendations to change, eliminate, and add programs. After receiv- ing the President’s proposal, the Congress reviews it and makes changes. It first passes a budget resolution setting its own targets for receipts, outlays, and the surplus or deficit. Next, individual spending and revenue bills that are consistent with the goals of the budget resolution are enacted. In fiscal year 2001 (which began on October 1, 2000, and ended on September 30, 2001), Federal income was $2.0 trillion and outlays were $1.9 trillion, leaving a surplus of $0.1 trillion.
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