TEST

For Use in Preparing Tax Year 2002 Returns

IRS www.irs.gov

IRS VOLUNTEERS

VOLUNTEERASSISTOR'SGUIDE

FOR USE IN IRS VOLUNTEER PROGRAMS

VITA Volunteer Income Tax Assistance

TCE Tax Counseling for the Elderly

The purpose of the VITA and TCE Programs is to provide free tax assistance to taxpayers.

Before beginning the test, please read and sign the Volunteer Agreement on page ii.

Department of the Treasury

Internal Revenue Service

Form 6744 (Rev. 2002)

Catalog Number 43560V
Pass Fail

Part A – 1. 10. 19.

Basic 2. 11. 20.

3. 12. 21.

4. 13. 22.

5. 14. 23.

6. 15. 24.

7. 16. 25.

8. 17. 26.

9. 18.

Part B – 1. 8. 15.

Wage Earner 2. 9. 16.

3. 10. 17.

4. 11. 18.

5. 12. 19.

6. 13.

7. 14.

Part C – 1. 6. 11.

Pension Earner 2. 7. 12.

3. 8. 13.

4. 9. 14.

5. 10. 15.

TEST Answer Sheet

Instructions: Record all of your answers on this sheet and return to your sponsor or local

IRS SPEC Office for grading. Your grader will return this sheet to you and retain the

Volunteer Agreement/Certification sheet for documentation of certification. Be sure to

include your completed Volunteer Agreement/Certification with this sheet.

Print your name and address neatly on

the lines to the left so that we may

return your results promptly.

You are certified to prepare the following returns:

Wage Earner Pension Earner

You may take the retest for any part you are not certified to prepare.

You are not certified to prepare the returns for part(s) you failed. You may take the

Retest for: Basic Wage Earner Pension Earner

Please note: Part A – Basic is required for both Wage Earner and Pension Earner.

i

iii

Certification

IRS or Sponsor use only:

Correct number of Number Correct Pass Fail

responses needed

Part A —

Basic 18 out of 26

Part B — 

Wage Earner 13 out of 19

Part C — 

Pension Earner 11 out of 15

Certified By Date

Volunteer Agreement

The purpose of the VITA and TCE Program is to provide free tax assistance to taxpayers.

Before beginning the test, please read the statement below and complete all lines. If you have

questions regarding the meaning of the statement, please check with your instructor or 

representative of the local IRS or sponsoring organization.

I understand I cannot accept payment or donations from the public for my services as a

volunteer, nor can I solicit business from taxpayers I assist.

Print Name

Home Street Address

City, State, Zip Code

Signature Date

Daytime Telephone Number

Return this sheet along with your answer sheet only (unless otherwise

instructed) to your sponsor or local IRS SPEC office.

This sheet is to be retained by your sponsor or the local IRS SPEC Office.

( )

v

The Volunteer Assistor’s Test

Introduction

This test is an open-book test. You may use your course book, Publication 17, or any other

materials you will use as a volunteer. Please complete the test on your own. Taking the test in

groups or with outside assistance could prove to be a disservice to the people you have

volunteered to help. Note: The course book should not be used as a reference source at your

volunteer site.

The three parts of the test and the general criteria for passing the test to become a certified

volunteer assistor are:

• Part A — Basic Covers the general tax laws which apply to all taxpayers. This part 

of the test covers Lessons 1 through 7.

You must answer 18 out of 26 questions correctly.

• Part B — Wage Earner Covers credits and questions for the typical wage earner. This part 

of the test covers Lessons 8 through 11.

You must answer 13 out of 19 questions correctly.

• Part C — Pension Earner Covers credits and questions for the typical pension earner. This 

part of the test covers Lessons 12 through 15.

You must answer 11 out of 15 questions correctly.

You must pass the Basic and Wage Earner sections to be certified to prepare wage earner

type returns such as Forms 1040EZ, 1040A and simple Form 1040. 

You must pass the Basic and Pension Earner sections to be certified to prepare pension

type returns and the more complex Form 1040.

You must pass all parts (Basic, Wage Earner and Pension Earner) to be certified to prepare

all returns authorized under the VITA/TCE program.

If you fail any part(s), you need only take and pass the retest on the part(s) of the test you

failed in order to become certified to prepare the returns as noted above.

What to do when you complete your test:

After you have completed your test, please transfer all answers to the tear-out Test Answer

Sheet located in the front of the booklet. Forward the completed Test Answer Sheet and

the completed Volunteer Agreement/Certification Sheet only to your sponsor, instructor

or local IRS SPEC office as directed for grading. You will receive your answer sheet back

with your results. If you need to retake any part of the test, you will be provided the retest

booklet.

Do not send your entire test booklet unless otherwise directed.
vi

Special Notes:

You, our volunteers, are our front-line ambassadors. You provide an invaluable service to

your community and help to carry the mission of the Internal Revenue Service to the public.

The Internal Revenue Service has set a goal to have 80% of all tax returns filed

electronically by the year 2007. To this goal, our training is moving toward a computerbased training and testing model.

IRS e-file. After completing the class on basic tax law, we urge you to learn how to

electronically file (e-file) the returns you prepare. E-filing uses automation to quickly check

for errors or missing information. Consequently, e-file returns have a higher accuracy rate

than paper prepared returns. Other benefits of e-filing include:

• Confirmation that the tax return was received by the IRS.

• Refunds are generally issued within 7-10 days of acceptance by the IRS.

• The additional option of using direct debit of the taxpayer's bank account to pay a 

balance due.

Ask your instructor or site coordinator for information about our electronic filing classes.

Note: All names, social security numbers, employer identification numbers, and routing

numbers in this document are fictitious. If attempting to process any of the problems for efile practice, consult your instructor or site coordinator on the manner in which these

problems can be done.
Record all answers on the tear-out Test Answer Sheet located in the front of the test

booklet.

1

Record all answers on the tear-out Test Answer Sheet located in the front of the test

booklet.

PART A – Basic Section

A-1 Which of the following documents are NOT acceptable for verifying the social security 

numbers of taxpayers and their dependents?

a. A photocopy of the original Social Security Card

b. A Form SSA-1099 for taxpayer or dependent

c. A hand written list of names and Social Security numbers

d. A copy of last year’s tax return and the taxpayer advises he/she had no problem 

receiving his/her refund last year.

e. None of the above

In the following questions, determine if the taxpayer can claim a dependency exemption.

a. Yes

b. No

A-2 Kerry’s cousin, Michael, has no income and lived with Kerry for eight months during 

2002. Kerry provided all of Michael’s support. Michael is a U.S. citizen and single. 

Can Kerry claim Michael as a dependent?

A-3 Hector is 24 years old, single and a full-time student at a local college. In 2002, he 

earned $5,735 from a part time job, all of which he placed into his savings account. 

Hector lives at home with his parents and is fully supported by them. Hector and his

parents are U.S. citizens. Can Hector’s parents claim him as a dependent on their 2002 

tax return?

In the following questions determine the most appropriate filing status for each case.

a. Single

b. Married Filing Jointly

c. Married Filing Separately

d. Head of Household

e. Qualifying Widow(er) with Dependent Child

A-4 Tom and Sandra separated on June 15, 2002. Prior to their separation they 

shared equally in the cost of maintaining their home which was also home to their three 

year old son. After separating Sandra provided all the costs of maintaining the home and

all the support for herself and her son. Sandra will not file a joint return with Tom. What is

the best filing status for Sandra?

A-5 In the same case above, what is Tom’s filing status?

A-6 Clara’s husband passed away in March 2002. Clara’s 19 year old daughter continued to 

live at home and attend college full time. Clara is able to claim her daughter as a

dependent. What is Clara’s most advantageous filing status this year?

A-7 In the situation above, if Clara’s daughter continues as a full time college student through

2003 and maintains her dependency status, what will be Clara’s most advantageous

filing status in 2003?
Record all answers on the tear-out Test Answer Sheet located in the front of the test

booklet.

2

Record all answers on the tear-out Test Answer Sheet located in the front of the test

booklet.

For questions A-8 through A-10, determine if the following individuals must or should file

a return.

a. Must File 

b. Should File

A-8 After graduating from college, Charles started a small business. He is single and cannot 

be claimed as a dependent on anyone’s tax return. His net proceeds from his business 

are $1,200. He has no other income.

A-9 Sam brings you his only Form W-2 which shows Box 1 wages of $9,745 and Box 2 

Federal Income Tax Withheld of $0. Sam tells you he is 55 years of age and has two 

dependent children ages 10 and 15. He tells you that his wife left him two years ago and

he does not know where she is.

A-10 Emily shows you her Form W-2. Her Box 1 wages are $4,987, Box 2 FITW is $0, and 

Box 9 Advanced EIC payments is $155.

For questions A-11 through A-14, determine if the following taxpayers can take an IRA

deduction (full or partial) on their 2002 tax return.

a. Yes

b. No

A-11 Carrie is single, covered by a pension plan at work and has a modified AGI of $35,781.

A-12 Jerold is single, age 73 and has a modified AGI of $21,555. His Form W-2 shows he is 

not covered by a pension plan.

A-13 Raymond and Nora are filing a joint return. Raymond’s Form W-2 shows he is covered 

by a pension plan and his Box 1 wages are $64,444. Nora’s Form W-2 shows she is not 

covered by a pension plan and her Box 1 wages are $12,654. Their modified AGI is 

$77,098.

A-14 Paula separated from her husband on April 5, 2002, and will be filing as Married Filing 

Separately. Paula’s Form W-2 shows that she is covered by a pension plan, her 

wages are $12,234 and you calculate her modified AGI to be $10,054.
Record all answers on the tear-out Test Answer Sheet located in the front of the test

booklet.

3

Record all answers on the tear-out Test Answer Sheet located in the front of the test

booklet.

A-15 When completing a Schedule C-EZ, what is the Principal Business or Professional 

Activity code you would enter on Part I, Line A for a roofing contractor? (Use the 

Business Codes in your Tax Forms Booklet Appendix)

a. 722300

b. 235610

c. 112900

d. 811120

e. None of the above

For questions A-16 and A-17, answer true or false to the statements about the new

Tuition and Fees Adjustment.

a. True

b. False

A-16 A taxpayer using the Married Filing Separately filing status is eligible for the adjustment.

A-17 A taxpayer can claim the Hope Credit and take the tuition and fees adjustment for the 

same student.

For questions A-18 and A-19, answer true or false to the statements about the new

Educator Expenses adjustment.

a. True

b. False

A-18 A college professor is not an eligible educator.

A-19 Qualified expenses include books, supplies, equipment (including computer equipment, 

software, and services) and other materials used in the classroom.
Record all answers on the tear-out Test Answer Sheet located in the front of the test

booklet.

4

Record all answers on the tear-out Test Answer Sheet located in the front of the test

booklet.

For questions A-20 and A-21, use the following information to complete Schedule C-EZ

and Schedule SE.

Ken is an independent painting contractor in the construction industry. He had gross 

receipts of $10,953 and supply expenses of $1,675. He provided you the following

information on his vehicle:

Vehicle placed in service 3/6/2002

Total business miles 1,564

Total personal miles 0

Owns a 2nd vehicle for personal use

Does not use business vehicle for personal use

Maintains a written log of mileage

A-20 What is the figure on Schedule C-EZ Line 3, Net Profit?

a. $13,199

b. $ 7,800

c. $12,953

d. $ 8,707

e. None of the above

A-21 What is the figure on Schedule SE Line 6, Deduction for one-half of self-employment 

tax?

a. 0

b. $544

c. $615

d. $1,088

e. $1,203
5

Draft as of

3/07/2002

SCHEDULE C-EZ OMB No. 1545-0074

(Form 1040)

Net Profit From Business

(Sole Proprietorship)

 Partnerships, joint ventures, etc., must file Form 1065 or 1065-B.

Department of the Treasury

Internal Revenue Service

Attachment

 Attach to Form 1040 or 1041.  See instructions on back. Sequence No. 09A

Business name. If no separate business name, leave blank. D Employer ID number (EIN), if any

Business address (including suite or room no.). Address not required if same as on Form 1040, page 1.

C

E

Gross receipts. Caution. If this income was reported to you on Form W-2 and the “Statutory

employee” box on that form was checked, see Statutory Employees in the instructions for

Schedule C, line 1, on page C-2 and check here  1

2 Total expenses. If more than $2,500, you must use Schedule C (see instructions) 2

3

3 Net profit. Subtract line 2 from line 1. If less than zero, you must use Schedule C. Enter on

Form 1040, line 12, and also on Schedule SE, line 2. (Statutory employees do not report this

amount on Schedule SE, line 2. Estates and trusts, enter on Form 1041, line 3.)

For Paperwork Reduction Act Notice, see Form 1040 instructions. Cat. No. 14374D Schedule C-EZ (Form 1040) 2002

City, town or post office, state, and ZIP code

You May Use

Schedule C-EZ

Instead of

Schedule C

Only If You:

And You:

● Use the cash method of accounting.

● Had only one business as a sole

proprietor.

● Had business expenses of $2,500 or

less. ● Are not required to file Form 4562,

Depreciation and Amortization, for

this business. See the instructions

for Schedule C, line 13, on page

C-3 to find out if you must file.

● Do not deduct expenses for

business use of your home.

● Do not have prior year unallowed

passive activity losses from this

business.

 

Name of proprietor Social security number (SSN)

General Information

A Principal business or profession, including product or service B Enter code from pages C-7 & 8



Figure Your Net Profit

Part I

Part II

● Did not have a net loss from your

business.

● Had no employees during the year.

1

● Did not have an inventory at any

time during the year.

6 Do you (or your spouse) have another vehicle available for personal use? Yes No

8a Do you have evidence to support your deduction? Yes No

If “Yes,” is the evidence written? Yes No

7 Was your vehicle available for personal use during off-duty hours? Yes No

5 Of the total number of miles you drove your vehicle during 2002, enter the number of miles you used your vehicle for:

Business b Commuting c Other

4

Part III Information on Your Vehicle. Complete this part only if you are claiming car or truck expenses on line 2.

a

b

(99)

When did you place your vehicle in service for business purposes? (month, day, year)  . / /

2002

Ken Hamilton 000 00 5946

Painting Contractor 235210

7

Draft as of

6/19/2002

SCHEDULE SE OMB No. 1545-0074

(Form 1040) Self-Employment Tax

Department of the Treasury

Internal Revenue Service

Attachment

 Attach to Form 1040.  See Instructions for Schedule SE (Form 1040). Sequence No. 17

Name of person with self-employment income (as shown on Form 1040) Social security number of person

with self-employment income 

Who Must File Schedule SE

You must file Schedule SE if:

● You had net earnings from self-employment from other than church employee income (line 4 of Short Schedule SE or line 4c of

Long Schedule SE) of $400 or more or

Exception. If your only self-employment income was from earnings as a minister, member of a religious order, or Christian Science

practitioner and you filed Form 4361 and received IRS approval not to be taxed on those earnings, do not file Schedule SE. Instead,

write “Exempt–Form 4361” on Form 1040, line 56.

Section A—Short Schedule SE. Caution. Read above to see if you can use Short Schedule SE.

Net farm profit or (loss) from Schedule F, line 36, and farm partnerships, Schedule K-1 (Form

1065), line 15a

1

1

Net profit or (loss) from Schedule C, line 31; Schedule C-EZ, line 3; Schedule K-1 (Form 1065),

line 15a (other than farming); and Schedule K-1 (Form 1065-B), box 9. Ministers and members

of religious orders, see page SE-1 for amounts to report on this line. See page SE-2 for other

income to report

2

2

3 Combine lines 1 and 2 3

Net earnings from self-employment. Multiply line 3 by 92.35% (.9235). If less than $400,

do not file this schedule; you do not owe self-employment tax 

4

4

5 Self-employment tax. If the amount on line 4 is: 

For Paperwork Reduction Act Notice, see Form 1040 instructions. Schedule SE (Form 1040) 2002

● You had church employee income of $108.28 or more. Income from services you performed as a minister or a member of a

religious order is not church employee income. See page SE-1.

Cat. No. 11358Z

Deduction for one-half of self-employment tax. Multiply line 5 by

50% (.5). Enter the result here and on Form 1040, line 29

● $84,900 or less, multiply line 4 by 15.3% (.153). Enter the result here and on 

Form 1040, line 56.

● More than $84,900, multiply line 4 by 2.9% (.029). Then, add $10,527.60 to the

result. Enter the total here and on Form 1040, line 56.

May I Use Short Schedule SE or Must I Use Long Schedule SE?

Did You Receive Wages or Tips in 2002?

Was the total of your wages and tips subject to social security

or railroad retirement tax plus your net earnings from

self-employment more than $84,900?

Did you receive tips subject to social security or Medicare tax

that you did not report to your employer?

Are you using one of the optional methods to figure your net

earnings (see page SE-3)?

Are you a minister, member of a religious order, or Christian

Science practitioner who received IRS approval not to be taxed

on earnings from these sources, but you owe self-employment

tax on other earnings?

Did you receive church employee income reported on Form

W-2 of $108.28 or more?

You May Use Short Schedule SE Below You Must Use Long Schedule SE on the Back





Yes



No Yes







No

No

No

No

Yes



Yes



Yes



Yes



 







No

Note. Even if you had a loss or a small amount of income from self-employment, it may be to your benefit to file Schedule SE and

use either “optional method” in Part II of Long Schedule SE. See page SE-3.

6

5

6



(99)

2002

Ken Hamilton 000 00 5946
Record all answers on the tear-out Test Answer Sheet located in the front of the test

booklet.

8

Record all answers on the tear-out Test Answer Sheet located in the front of the test

booklet.

For question A-22, complete the Form 1040, Student Loan Interest Deduction WorksheetLine 25, using the following information:

Taxpayer is single with no dependents. His total income reported on Form 1040, Line 22,

is $52,587. He has no other adjustments to income on Lines 23 – 33A. He paid $750 in 

interest on his qualified student loan.

A-22 What amount is entered on Form 1040, Line 25?

a. 0

b. $129

c. $621

d $646

e. $750
9

Draft as of

7/31/2002

- 29 -

Form 1040—Line 25

Need more information or forms? See page 7.

If you were covered by a retirement plan

and you file Form 2555, 2555-EZ, or 8815,

or you exclude employer-provided adoption

benefits, see Pub. 590 to figure the amount,

if any, of your IRA deduction.

Married Persons Filing Separately. If you

were not covered by a retirement plan but

your spouse was, you are considered covered by a plan unless you lived apart from

your spouse for all of 2002.

Line 25

Student Loan Interest

Deduction

You may claim the student loan interest deduction if all four of the following apply.

1. You paid interest in 2002 on a qualified

student loan (see page 29).

2. Your filing status is any status except

married filing separately.

3. Your modified adjusted gross income

(AGI) is less than: $65,000 if single, head

of household, or qualifying widow(er);

$130,000 if married filing jointly. Use lines

3 through 5 of the worksheet on page 29 to

figure your modified AGI.

4. You are not claimed as a dependent on

someone’s (such as your parent’s) 2002 tax

return.

Use the worksheet below to figure your

student loan interest deduction.

Exception. Use Pub. 970 instead of the

worksheet below to figure your student loan

interest deduction if you file Form 2555,

2555-EZ, or 4563, or you exclude income

from sources within Puerto Rico.

Qualified Student Loan. This is any loan

you took out to pay the qualified higher

education expenses for yourself, your

spouse, or anyone who was your dependent

when the loan was taken out. The person for

whom the expenses were paid must have

been an eligible student (defined on this

page). However, a loan is not a qualified

student loan if (a) any of the proceeds were

used for other purposes or (b) the loan was

from either a related person or a person who

borrowed the proceeds under a qualified employer plan or a contract purchased under

such a plan. To find out who is a related

person, see Pub. 970.

Qualified higher education expenses

generally include tuition, fees, room and

board, and related expenses such as books

and supplies. The expenses must be for education in a degree, certificate, or similar

program at an eligible educational institution. An eligible educational institution includes most colleges, universities, and

certain vocational schools. You must reduce

the expenses by the following nontaxable

benefits.

● Employer-provided educational assistance benefits that are not included in

box 1 of your W-2 form(s).

● Excludable U.S. series EE and I savings bond interest from Form 8815.

● Qualified tuition program earinings.

● Qualified distributions from a Coverdell education savings account.

● Any scholarship, educational assistance allowance, or other payment (but not

gifts, inheritances, etc.) excluded from

income.

For more details on these expenses, see

Pub. 970.

An eligible student is a person who:

● Was enrolled in a degree, certificate, or

other program (including a program of study

abroad that was approved for credit by the

institution at which the student was enrolled) leading to a recognized educational

credential at an eligible educational institution and

● Carried at least half the normal fulltime workload for the course of study he or

she was pursuing.

Student Loan Interest Deduction Worksheet—Line 25 Keep for Your Records

1.

2.

3.

4.

5.

1.

Enter the total interest you paid in 2002 on qualified student loans (defined above). Do not enter more

than $2,500

6.

Enter the amount shown below for your filing status.

Is the amount on line 4 more than the amount on line 5?

Divide line 6 by $15,000 ($30,000 if married filing jointly). Enter the result as a decimal (rounded to

at least three places). If the result is 1.000 or more, enter 1.000

Multiply line 1 by line 7

Enter the amount from Form 1040, line 22

Enter the total of the amounts from Form 1040, line 23, line 24, lines 27

through 33a, plus any amount you entered on the dotted line next to line 34

Subtract line 3 from line 2

7.

7.

8. 8.

9. Student loan interest deduction. Subtract line 8 from line 1. Enter the result here and on Form 1040,

line 25. Do not include this amount in figuring any other deduction on your return (such as on

Schedule A, C, E, etc.) 9.

.

Before you begin:  Complete Form 1040, lines 27 through 33a, if they apply to you.

 Figure any amount to be entered on the dotted line next to line 34 (see page 30).

 See the instructions for line 25 that begin on page 28.

No. Skip lines 6 and 7, enter -0- on line 8, and go to line 9.

Yes. Subtract line 5 from line 4

4.

5.

6.

2.

3.

● Single, head of household, or qualifying widow(er)—$50,000

● Married filing jointly—$100,000 

 Be sure you have read the Exception on page 28 to see if you can use this

worksheet instead of Pub. 970 to figure your deduction.
Record all answers on the tear-out Test Answer Sheet located in the front of the test

booklet.

10

Record all answers on the tear-out Test Answer Sheet located in the front of the test

booklet.

For questions A-23 and A-24 complete Form 1040, Schedule A for William Kendall with

$42,789 on Form 1040, Line 36, and the following expenses:

Unreimbursed Doctors bills 460

Unreimbursed Prescriptions 275

Medical insurance premiums 950

Life insurance premiums 675

Stop smoking treatment plan 475

Funeral costs for his Mother 4,500

Home mortgage interest 8,290

Property tax – personal residence 2,400

Property tax – vacation timeshare 185

Credit card interest 345

Cash contributions to church 850

Cash contributions to Senate re-election campaign 250

Tax preparation fee for 2001 taxes 125

Interest for personal car 585

Clothing donated to charity (fair market value) 175

Cash donated to Mary Green, a homeless person 75

State tax paid in 2002 4,975

Personal property tax portion of vehicle license fee 385

Gambling losses (winnings reported

on Form 1040, Line 21, were $1,300) 3,000

A-23 What is the amount on Schedule A, line 1?

a. $1,685

b. $2,160

c. $2,835

d. $3,209

e. $6,660

A-24 What is the amount on Schedule A, line 28?

a. $17,260

b. $17,829

c. $18,560

d. $18,635

e. $19,490
11

Draft as of

5/02/2002

SCHEDULES A&B OMB No. 1545-0074 Schedule A—Itemized Deductions

(Form 1040) (Schedule B is on back)

Department of the Treasury

Internal Revenue Service  Attach to Form 1040.  See Instructions for Schedules A and B (Form 1040).

Attachment

Sequence No. 07

Name(s) shown on Form 1040 Your social security number

Medical Caution. Do not include expenses reimbursed or paid by others.

and

Dental

Expenses

1 Medical and dental expenses (see page A-2) 1

2 2

3 Multiply line 2 above by 7.5% (.075) 3

4 Subtract line 3 from line 1. If line 3 is more than line 1, enter -0- 4

Taxes You 5 State and local income taxes 5

Paid 6 Real estate taxes (see page A-2) 6

8 Other taxes. List type and amount 

(See

page A-2.)

8

9 Add lines 5 through 8 9

Interest 10 Home mortgage interest and points reported to you on Form 1098

You Paid

10

Home mortgage interest not reported to you on Form 1098. If paid

to the person from whom you bought the home, see page A-3

and show that person’s name, identifying no., and address 

11

(See

page A-3.)

11

12

Points not reported to you on Form 1098. See page A-3

for special rules

12

13 Investment interest. Attach Form 4952 if required. (See

page A-3.) 13

14 Add lines 10 through 13 14

Gifts to 

Charity 15

15 Gifts by cash or check. If you made any gift of $250 or

more, see page A-4

16

Other than by cash or check. If any gift of $250 or more,

see page A-4. You must attach Form 8283 if over $500

16

17 Carryover from prior year 17

18 Add lines 15 through 17 18

19 Casualty or theft loss(es). Attach Form 4684. (See page A-5.)

Casualty and 

Theft Losses 19

Unreimbursed employee expenses—job travel, union

dues, job education, etc. You must attach Form 2106

or 2106-EZ if required. (See page A-5.) 

Job Expenses 20

and Most

Other

Miscellaneous

Deductions

22 Other expenses—investment, safe deposit box, etc. List

type and amount 

(See

page A-5 for

expenses to

deduct here.)

23 Add lines 20 through 22

24 Enter amount from Form 1040, line 36

25 Multiply line 24 above by 2% (.02)

26 Subtract line 25 from line 23. If line 25 is more than line 23, enter -0- 26

Other 27 Other—from list on page A-6. List type and amount  

Miscellaneous

Deductions 27

Total 28

Itemized

Deductions 28

For Paperwork Reduction Act Notice, see Form 1040 instructions. Schedule A (Form 1040) 2002

24

20

22

23

If you made a

gift and got a

benefit for it,

see page A-4.

25

Enter amount from Form 1040, line 36

No. Your deduction is not limited. Add the amounts in the far right column

for lines 4 through 27. Also, enter this amount on Form 1040, line 38.

Yes. Your deduction may be limited. See page A-6 for the amount to enter.

Cat. No. 11330X



Note.

Personal

interest is

not

deductible.



7 Personal property taxes 7

21 Tax preparation fees 21

Is Form 1040, line 36, over $137,300 (over $68,650 if married filing separately)?

(99)

2002

William Kendall 000 00 1928
Record all answers on the tear-out Test Answer Sheet located in the front of the test

booklet.

12

Record all answers on the tear-out Test Answer Sheet located in the front of the test

booklet.

For question A-25, complete the Form 1040, Capital Gain Tax Worksheet, for a taxpayer

whose filing status is married filing jointly and has the following entries on Form 1040:

Line 13, Capital Gain Distribution $ 1,852

Line 41, Taxable Income $ 48,495

A-25 What will be the amount you enter on Form 1040, Line 42?

a. $6,394

b. $6,759

c. $6,884

d. $7,210

e. $6,389
13

Draft as of

7/31/2002

- 34 -

Form 1040—Line 42

Need more information or forms? See page 7.

Line 42

Tax

Do you want the IRS to figure your tax for

you?

Yes. See Pub. 967 for details, including who is eligible and what to do. If you

have paid too much, we will send you a

refund. If you did not pay enough, we will

send you a bill.

No. Use one of the following methods

to figure your tax. Also include in the total

on line 42 any of the following taxes.

● Tax from Forms 8814 and 4972. Be

sure to check the appropriate box(es).

● Tax from recapture of an education

credit. You may owe this tax if (a) you

claimed an education credit in an earlier year

and (b) you, your spouse if filing jointly,

or your dependent received in 2002 either

tax-free educational assistance or a refund

of qualified expenses. See Form 8863 for

more details. If you owe this tax, enter the

amount and “ECR” on the dotted line next

to line 42.

Tax Table or Tax Rate Schedules. If your

taxable income is less than $100,000, you

must use the Tax Table, which starts on

page 62, to figure your tax. Be sure you use

the correct column. If your taxable income

is $100,000 or more, use the Tax Rate

Schedules on page 74.

Exception. Do not use the Tax Table or Tax

Rate Schedules to figure your tax if either

1 or 2 below applies.

1. You are required to figure your tax

using Form 8615, Schedule D, or the Capital Gain Tax Worksheet below.

2. You use Schedule J (for farm income)

to figure your tax.

Form 8615. Form 8615 must generally be

used to figure the tax for any child who was

under age 14 on January 1, 2003, and who

had more than $1,500 of investment income,

such as taxable interest, ordinary dividends,

or capital gains (including capital gain distributions). But if neither of the child’s parents was alive on December 31, 2002, do

not use Form 8615 to figure the child’s tax.

Schedule D. If you had a net capital gain

on Schedule D (both lines 16 and 17 of

Schedule D are gains) and the amount on

Form 1040, line 41, is more than zero, use

Part IV of Schedule D to figure your tax.

Capital Gain Tax Worksheet. If you received capital gain distributions but you are

not required to file Schedule D, use the

worksheet below to figure your tax.

Schedule J. If you had income from farming, your tax may be less if you choose to

figure it using income averaging on

Schedule J.

Enter the amount from Form 1040, line 41

Capital Gain Tax Worksheet—Line 42 Keep for Your Records

1.

2. Enter the amount from Form 1040, line 13

3. Subtract line 2 from line 1. If zero or less, enter -0-

Figure the tax on the amount on line 3. Use the Tax Table or Tax Rate Schedules, whichever applies

● The amount on line 1 or

● $27,950 if single; $46,700 if married filing jointly or

qualifying widow(er); $23,350 if married filing separately;

or $37,450 if head of household.

4.

Is the amount on line 3 equal to or more than the amount on line 5?

5.

Subtract line 6 from line 5

6.

Multiply line 7 by 10% (.10)

7.

9. Are the amounts on lines 2 and 7 the same?

8.

4.

8.

Enter the smaller of:



10. Enter the amount, if any, from line 7

Subtract line 10 from line 9. If zero or less, enter -0-

Multiply line 11 by 20% (.20)

Add lines 4, 8, and 12

Figure the tax on the amount on line 1. Use the Tax Table or Tax Rate Schedules, whichever applies

Tax on all taxable income (including capital gain distributions). Enter the smaller of line 13 or

line 14 here and on Form 1040, line 42

11.

12.

13. 13.

14. 14.

15.

15.

Before you begin:  Be sure you do not have to file Schedule D (see the instructions for

Form 1040, line 13, on page 23).

 Be sure you checked the box on line 13 of Form 1040.

9.

3.

5.

6.

2.

7.

1.

10.

11.

12.

Yes. Leave lines 6 through 8 blank; go to line 9 and check the “No” box.

No. Enter the amount from line 3

Yes. Leave lines 9 through 12 blank; go to line 13.

No. Enter the smaller of line 1 or line 2
Record all answers on the tear-out Test Answer Sheet located in the front of the test

booklet.

14

Record all answers on the tear-out Test Answer Sheet located in the front of the test

booklet.

For question A-26, complete a Form 8880 for Julie Jefferson using the following

information:

Form W-2, box 12 has code “D” and $1000

Form 1040, line 36, is $29,670

Filing status is Head of Household

No other contributions or distributions

Form 1040, line 44, is $2,016

Form 1040, lines 45-48 are 0

A-26 What is the amount you will enter on Form 1040, line 49?

a. $100

b. $2,016

c. $500

d. 0

e. $200
15

Draft as of

5/14/2002

OMB No. 1545-xxxx

8880 Credit for Qualified Retirement Savings Contributions Form

Department of the Treasury

Internal Revenue Service

Attachment

Sequence No. 129  Attach to your tax return.

Name(s) shown on return Your social security number

For Paperwork Reduction Act Notice, see page 4. Cat. No. 33394O Form 8880 (2002)

● Your adjusted gross income is over $25,000 ($37,500 if head of household; $50,000 if married filing jointly);

2002

Caution. You cannot claim this credit if:

4

1 Enter the amount contributed to traditional and Roth IRAs for 2002 1

3

2

5

6

7

8

9

10

11

12

13

14

Enter the amount of salary reduction contributions to a 401(k) or other

qualified employer plan for 2002, plus any voluntary contributions (see

instructions)

2

3 Add lines 1 and 2 in columns (a) and (b) 

Enter the total of all Roth IRA distributions, plus all taxable distributions

from other qualified retirement plans, that were made after 1999 and

before the due date (including extensions) of your 2002 tax return (see

instructions)

4

5 Subtract line 4 from line 3 in columns (a) and (b). If zero or less, enter -0-

6 In each column, enter the smaller of line 5 or $2,000 

8 Enter the amount from Form 1040, line 36 (or Form 1040A, line 22)*

9 Enter the applicable decimal amount shown below for your filing status

Note: If line 9 is zero, stop; you cannot claim the credit.

10 Multiply line 7 by line 9 

11 Enter the amount from Form 1040, line 44 (or Form 1040A, line 28)

Enter the total of your credits from Form 1040, lines 45 through 48 (or

Form 1040A, lines 29 through 31) 

12

Subtract line 12 from line 11. If line 12 is equal to or more than line 11, stop; you cannot take

the credit 

13

Credit for qualified retirement savings contributions. Enter the smaller of line 10 or line 13

here and on Form 1040, line 49 (or Form 1040A, line 32) 

14

(a) You (b) Your spouse

● You were born after January 1, 1985;

● Someone else (such as your parent) claims you as a dependent for 2002; or

● You were a full-time student during 5 or more months in 2002.

7 Add the amounts on line 6. If zero, stop; you cannot claim the credit 

*See Pub. 970 for the amount to enter if you are filing Form 2555, 2555-EZ, or 4563 or you are excluding income from Puerto Rico.

If line 8 is-- Enter on line 9-- Single, Married filing 

separate, or 

Over-- Qualifing widow(er)

But not 

over--

Married

filing jointly

Head of 

household

---

$15,000

$16,250

$22,500

$24,375

$25,000

$30,000

$32,500

$37,500

$50,000

$15,000

$16,250

$22,500

$24,375

$25,000

$30,000

$32,500

$37,500

$50,000

---

.50

.50

.50

.50

.50

.50

.20

.10

.10

.00

.50

.50

.50

.20

.10

.10

.10

.10

.00

.00

.50

.20

.10

.10

.10

.00

.00

.00

.00

.00

X .

Julie Jefferson 000 00 5076

Record all answers on the tear-out Test Answer Sheet located in the front of the test

booklet.

17

Record all answers on the tear-out Test Answer Sheet located in the front of the test

booklet.

PART B – Wage Earner

For questions B-1 through B-6, identify which of the credits are refundable or non-refundable.

a. Refundable

b. Nonrefundable

B-1 Credit for child and dependent care expenses

B-2 Retirement savings contributions credit

B-3 Child tax credit

B-4 Earned income credit

B-5 Additional child tax credit

B-6 Education credits

For questions B-7 through B-11, determine if the taxpayer can claim the earned income

credit (EIC).

a. Yes

b. No

B-7 John is filing head of household and has two qualifying children. His Form W-2 shows 

Box 1 wages of $33,400. Will John receive the EITC?

B-8 Mary has 4 children, all under the age of 19. She and the children have lived with her 

mother, Louise, for two years. Mary will file as single and claim EIC for two of her children. Louise will file as head of household. Can Louise claim the EIC for the other two 

children?

B-9 Betty’s niece, Lynn, moved in with Betty in June 2002. Betty cared for Lynn like she 

would her own child. Lynn is 10 years old. Betty will file as head of household. Is Lynn 

Betty’s qualifying child for EIC purposes?

B-10 Elaine and Jim have two children and will file married filing jointly. Both of their children 

are under the age of 19. Their adjusted gross income and earned income is $33,978. 

Are they eligible to receive the EIC?

B-11 Jan has 2 children, all under the age of 19. Jan and the children lived with her mother, 

Carol, for all of 2002. Jan earned $2,456 and will file single. Her mother, Carol, will file 

head of household and earned $17,065. Jan and Carol decide that Carol will claim the 

EIC. If Jan and Carol both claim EIC on the basis of the same qualifying children, will 

the tie-breaker rules entitle Carol to retain the EIC? 
Record all answers on the tear-out Test Answer Sheet located in the front of the test

booklet.

18

Record all answers on the tear-out Test Answer Sheet located in the front of the test

booklet.

For questions B-12 through B-15, use the following scenario to complete a Form 1040

through line 48. Do not complete the rest of the return.

Alice and Jim Post are filing a joint return. They each have a Form W-2 and no other 

income. They have three dependent children, two of whom they send to day care to 

allow them both to work. Their son Joe is a sophomore and full time student at Syracuse

University. Alice and Jim paid $9,000 in tuition and fees. They tell you they want to take 

advantage of the new tuition and fees deduction. In addition, Alice is taking a computer 

class and paid $400 tuition. She will take advantage of the lifetime learning credit. They 

do not want to contribute to the Presidential Election Campaign. The children and the 

amounts paid for day care are below:

Joe SSN 000-00-1234 DOB 1/2/1982

Marie SSN 000-00-3456 DOB 4/19/1992 $ 1,900

Martha SSN 000-00-5678 DOB 7/4/1999 $ 6,250

Day Care facility Concord Child Care

EIN 78-1234591

4014 Hamilton Lane

Concord, NH 03301

B-12 What is the amount on Form 1040, line 26?

a. 0

b. $9,000

c. $1,500

d. $3,000

e. $4,500

B-13 What is the amount on Form 2441, line 3?

a. $8,150

b. $7,150

c. $3,800

d. 0

e. $4,800

B-14 What is the amount on Form 1040, line 46?

a. 0

b. $1,000

c. $3,800

d. $760

e. $660

B-15 What is the amount on Form 1040, line 48?

a. 0

b. $80

c. $400

d. $4,201

e. None of the above

20

Draft as of

7/31/2002

1

Control number

Retirement

plan Third-partysick pay Statutoryemployee

6

2

Employer’s name, address, and ZIP code

7 Allocated tips

Advance EIC payment

8

9 10

Wages, tips, other compensation Federal income tax withheld

Social security wages Social security tax withheld

11 12a

Employer’s state ID number

3 4

Employer identification number

Medicare wages and tips

Social security tips

13

5

Employee’s social security number

Employee’s first name and initial Nonqualified plans

Medicare tax withheld

15

14

16 17

Other

18

Employee’s address and ZIP code

State State wages, tips, etc. State income tax Locality name

Copy B To Be Filed with Employee’s FEDERAL Tax Return.

This information is being furnished to the Internal Revenue Service.

Department of the Treasury—Internal Revenue Service

Form

Dependent care benefits

See instructions for box 12

a

b

c

d

e

f

W-2 Wage and Tax

Statement 20 20

OMB No. 1545-0008

Last name C

o

d

e

12b

C

o

d

e

12c

C

o

d

e

Local wages, tips, etc. 19 Local income tax 20

12d

C

o

d

e

Safe, accurate,

FAST! Use

Visit the IRS Web Site

at www.irs.gov.

(Rev. February 2002)

Draft as of

7/31/2002

1

Control number

Retirement

plan Third-partysick pay Statutoryemployee

6

2

Employer’s name, address, and ZIP code

7 Allocated tips

Advance EIC payment

8

9 10

Wages, tips, other compensation Federal income tax withheld

Social security wages Social security tax withheld

11 12a

Employer’s state ID number

3 4

Employer identification number

Medicare wages and tips

Social security tips

13

5

Employee’s social security number

Employee’s first name and initial Nonqualified plans

Medicare tax withheld

15

14

16 17

Other

18

Employee’s address and ZIP code

State State wages, tips, etc. State income tax Locality name

Copy B To Be Filed with Employee’s FEDERAL Tax Return.

This information is being furnished to the Internal Revenue Service.

Department of the Treasury—Internal Revenue Service

Form

Dependent care benefits

See instructions for box 12

a

b

c

d

e

f

W-2 Wage and Tax

Statement 20 20

OMB No. 1545-0008

Last name C

o

d

e

12b

C

o

d

e

12c

C

o

d

e

Local wages, tips, etc. 19 Local income tax 20

12d

C

o

d

e

Safe, accurate,

FAST! Use

Visit the IRS Web Site

at www.irs.gov.

(Rev. February 2002)

Casper Appliances

201 West Third St.

Hartford, CT 06101

Alice Post

1010 North Franklin

Concord, NH 03301

78-1234567 14,650.00 364.00

14,650.00 908.30

14,650.00 212.43

X

Thorton Electronics

695 South 23rd St.

Concord, NH 03301

Jim Post

1010 N. Franklin

Concord, NH 03301

78-1563491 48,250 3,848.00

49,250 3,053.50

49,250 714.13

X

1,000.00

000-00-7651

000-00-1576
21

Draft as of

4/23/2002

Department of the Treasury—Internal Revenue Service 1040 U.S. Individual Income Tax Return

For the year Jan. 1–Dec. 31, 2002, or other tax year beginning , 2002, ending , 20 OMB No. 1545-0074

Your first name and initial Last name Your social security number

(See

instructions

on page 19.)

L

A

B

E

L

H

E

R

E

If a joint return, spouse’s first name and initial Last name Spouse’s social security number

Use the IRS

label.

Otherwise,

please print

or type.

Home address (number and street). If you have a P.O. box, see page 19. Apt. no.

City, town or post office, state, and ZIP code. If you have a foreign address, see page 19.

Presidential

Election Campaign

1 Single

Filing Status 2 Married filing jointly (even if only one had income)

Check only

one box.

3

Qualifying widow(er) with dependent child (year

spouse died  ). (See page 19.)

6a Yourself. If your parent (or someone else) can claim you as a dependent on his or her tax

Exemptions return, do not check box 6a

b Spouse

(4) if qualifying

child for child tax

credit (see page 20)

c Dependents: (2) Dependent’s

social security number

(3) Dependent’s

relationship to (1) First name Last name you

If more than five

dependents,

see page 20.

d Total number of exemptions claimed

7 Wages, salaries, tips, etc. Attach Form(s) W-2 7

Income 8a Taxable interest. Attach Schedule B if required 8a

b Tax-exempt interest. Do not include on line 8a 8b Attach

Forms W-2 and

W-2G here.

Also attach

Form(s) 1099-R

if tax was

withheld.

9 Ordinary dividends. Attach Schedule B if required 9

10 Taxable refunds, credits, or offsets of state and local income taxes (see page 22) 10

11 Alimony received 11

12 Business income or (loss). Attach Schedule C or C-EZ 12

Enclose, but do

not attach, any

payment. Also,

please use

Form 1040-V.

13 Capital gain or (loss). Attach Schedule D if required. If not required, check here  13

14 Other gains or (losses). Attach Form 4797 14

15a IRA distributions 15a 15b b Taxable amount (see page 23)

16a Pensions and annuities 16a b Taxable amount (see page 23) 16b

17 Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E 17

18 Farm income or (loss). Attach Schedule F 18

19 Unemployment compensation 19

20a Social security benefits 20a b Taxable amount (see page 25) 20b

21 21

22 Add the amounts in the far right column for lines 7 through 21. This is your total income  22

IRA deduction (see page 27) 24

23

Archer MSA deduction. Attach Form 8853

26

25

One-half of self-employment tax. Attach Schedule SE

27

Self-employed health insurance deduction (see page 30)

26

28

27

Self-employed SEP, SIMPLE, and qualified plans

29

28

Penalty on early withdrawal of savings

30

29

Alimony paid b Recipient’s SSN 

Add lines 23 through 33a 34

30

Subtract line 34 from line 22. This is your adjusted gross income 

31

Adjusted

Gross

Income

35

If you did not

get a W-2,

see page 21. Form

Married filing separately. Enter spouse’s SSN above

and full name here. 

Cat. No. 11320B





Label

Form 1040 (2002)

IRS Use Only—Do not write or staple in this space.

Head of household (with qualifying person). (See page 19.) If

the qualifying person is a child but not your dependent, enter

this child’s name here. 

Other income. List type and amount (see page 27)

Moving expenses. Attach Form 3903

24

25

For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see page 72.

No. of boxes

checked on

6a and 6b

No. of children

on 6c who:

Dependents on 6c

not entered above

Add numbers

on lines

above 

● lived with you

● did not live with

you due to divorce

or separation

(see page 20)

32 32

Student loan interest deduction (see page 28)

31

33a

  Important!

Yes No

Note. Checking “Yes” will not change your tax or reduce your refund.

Do you, or your spouse if filing a joint return, want $3 to go to this fund? 

You must enter

your SSN(s) above.

No Yes

You Spouse

(See page 19.)

(99)

Tuition and fees deduction (see page XX)

34

33a

2002

4

5

35

Educator expenses (see page xx) 23

Jim Post

Alice I Post

1010 N. Franklin

Concord, NH 03301

000 00 1576

000 00 7651
22

Draft as of

4/23/2002

Itemized deductions (from Schedule A) or your standard deduction (see left margin)

Add lines 62 through 68. These are your total payments 

Form 1040 (2002) Page 2

36 Amount from line 35 (adjusted gross income) 36

37a Check if:

Tax and

Credits

Add the number of boxes checked above and enter the total here  37a

Single,

$4,700

If you are married filing separately and your spouse itemizes deductions, or

you were a dual-status alien, see page 31 and check here 

b

37b

38 38

39 Subtract line 38 from line 36 39

40

If line 36 is $103,000 or less, multiply $3,000 by the total number of exemptions claimed on

line 6d. If line 36 is over $103,000, see the worksheet on page 32

40

41 Taxable income. Subtract line 40 from line 39. If line 40 is more than line 39, enter -0- 41

42 42

46

47

52

Education credits. Attach Form 8863

45

50

Other credits. Check applicable box(es):

49

54

55

Add lines 45 through 53. These are your total credits

49

Subtract line 54 from line 44. If line 54 is more than line 44, enter -0- 

54

Self-employment tax. Attach Schedule SE

55

Other

Taxes

56

70

Social security and Medicare tax on tip income not reported to employer. Attach Form 4137

Tax on qualified plans, including IRAs, and other tax-favored accounts. Attach Form 5329 if required 58

57

59

Add lines 55 through 60. This is your total tax 

60 60

62 Federal income tax withheld from Forms W-2 and 1099 62

63 2002 estimated tax payments and amount applied from 2001 return 63

Payments

64

Amount paid with request for extension to file (see page 51) 67

66

Excess social security and tier 1 RRTA tax withheld (see page 51) 65

67

69

68 Other payments from:

71a 71a

72 72

If line 69 is more than line 61, subtract line 61 from line 69. This is the amount you overpaid

73 73

Amount of line 70 you want refunded to you 

Refund

74

Amount of line 70 you want applied to your 2003 estimated tax 

Estimated tax penalty (see page 52)

Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and

belief, they are true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.

74

You were 65 or older, Blind; Spouse was 65 or older, Blind.

a Form 3800

b Form 8801 c Specify

a Form 2439 b Form 4136

58

Household employment taxes. Attach Schedule H

59

68

Amount

You Owe

Sign

Here Your signature Date

Keep a copy

for your

records.

Spouse’s signature. If a joint return, both must sign. Date

Date Preparer’s SSN or PTIN Preparer’s

signature Check if

self-employed

Paid

Preparer’s

Use Only Firm’s name (or

yours if self-employed),

address, and ZIP code

EIN

Phone no.







Your occupation

Tax (see page 33). Check if any tax is from

Amount you owe. Subtract line 69 from line 61. For details on how to pay, see page 52 

b

Direct deposit?

See page 51

and fill in 71b,

71c, and 71d.

Routing number

Account number

c Checking Savings

a Form(s) 8814 Form 4972

b

d





69

48

45

Retirement savings contributions credit. Attach Form 8880

56

57

Advance earned income credit payments from Form(s) W-2

70



Child tax credit (see page XX)

Credits from:

48

52

50

Additional child tax credit. Attach Form 8812

65

66

Head of

household,

$6,900

Married filing

jointly or

Qualifying

widow(er),

$7,850

Married

filing

separately,

$3,925

Standard

Deduction

for—

Joint return?

See page 19.

Daytime phone number

( )

Earned income credit (EIC)

Credit for the elderly or the disabled. Attach Schedule R

43

44

46

Alternative minimum tax (see page 34). Attach Form 6251

Add lines 42 and 43 

Credit for child and dependent care expenses. Attach Form 2441

47

If you have a

qualifying

child, attach

Schedule EIC.

43

44

64

Spouse’s occupation

( )

Form 1040 (2002)

● People who

checked any

box on line

37a or 37b or

who can be

claimed as a

dependent,

see page 31.

● All others:

Designee’s

name 

Do you want to allow another person to discuss this return with the IRS (see page 53)? Third Party

Designee Phone

no.  ( )

Yes. Complete the following. No

Personal identification

number (PIN) 

53

Foreign tax credit. Attach Form 1116 if required

53

a Form 8396 b Form 8859

51 Adoption credit. Attach Form 8839 51

61 61

Type:
23

Draft as of

7/31/2002

- 30 -

Form 1040—Lines 26 Through 30

Need more information or forms? See page 7.

Line 26

Tuition and Fees Deduction

You may claim the tuition and fees deduction if all five of the following apply.

1. You paid qualified tuition and fees (see

below) in 2002 for yourself, your spouse, or

your dependent(s).

2. Your filing status is any status except

married filing separately.

3. Your modified adjusted gross income

(AGI) is not more than: $65,000 if single,

head of household, or qualifying widow(er);

$130,000 if married filing jointly. Use lines

1 through 3 of the worksheet below to figure

your modified AGI.

4. You cannot be claimed as a dependent

on someone’s (such as your parent’s) 2002

tax return.

5. You are not claiming an education

credit on line 48 for the same student.

Use the worksheet below to figure your

tuition and fees deduction.

Exception. Use Pub. 970 instead of the

worksheet below to figure your tuition and

fees deduction if you file Form 2555,

2555-EZ, or 4563, or you exclude income

from sources within Puerto Rico.

Qualified Tuition and Fees. These are

amounts paid in 2002 for tuition and fees

required for the student’s enrollment or attendance at an eligible educational institution during 2002. Amounts paid include

those paid with borrowed funds. An eligible

educational institution includes most colleges, universities, and certain vocational

schools.

Qualified tuition and fees do not include

any of the following:

● Amounts paid for room, board, transportation, books, supplies, student activity

fees, athletic fees, insurance expenses, or

any other expense that is not related to the

course of instruction.

● Expenses for any course involving

sports, games, or hobbies, unless such

course is part of the student’s degree program.

● Amounts used to figure any other deduction claimed by you, your spouse, or

your dependent, such as on Schedule A or

Schedule C.

Qualified tuition and fees must be reduced

by the following nontaxable benefits.

● Excludable U.S. series EE and I savings bond interest from Form 8815.

● Qualified tuition program earnings.

● Qualified distributions from a Coverdell education savings account.

● Any scholarship educational assistance

allowance or other payment (but not gifts,

inheritances, etc.) excluded from income.

Qualified tuition and fees paid in 2002

for an academic period that begins in the

first three months of 2003 can be used in

figuring your 2002 deduction.

For more details, see Pub. 970.

Line 27

Archer MSA Deduction

If you made a contribution to an Archer

MSA for 2002, you may be able to take this

deduction. See Form 8853.

Line 28

Moving Expenses

If you moved in connection with your job

or business or started a new job, you may

be able to take this deduction. But your new

workplace must be at least 50 miles farther

from your old home than your old home was

from your old workplace. If you had no

former workplace, your new workplace

must be at least 50 miles from your old

home. Use TeleTax topic 455 (see page 11)

or see Form 3903.

Line 29

One-Half of SelfEmployment Tax

If you were self-employed and owe selfemployment tax, fill in Schedule SE to

figure the amount of your deduction.

Line 30

Self-Employed Health

Insurance Deduction

You may be able to deduct part of the

amount paid for health insurance for yourself, your spouse, and dependents if either

of the following applies.

● You were self-employed and had a net

profit for the year or

● You received wages in 2002 from an

S corporation in which you were a morethan-2% shareholder. Health insurance benefits paid for you may be shown in box 14

of your W-2 form.

Tuition and Fees Deduction Worksheet—Line 26 Keep for Your Records

1.

2.

3.

4.

Enter the amount from Form 1040, line 22 1.

Enter the total of the amounts from Form 1040, lines 23 through 25, lines 27 through 33a, plus any

amount you entered on the dotted line next to line 34 2.

Subtract line 2 from line 1

Tuition and fees deduction. Enter the total qualified tuition and fees (defined above) you paid in 2002.

Do not enter more than $3,000. Also, enter this amount on Form 1040, line 26

Before you begin:  Complete Form 1040, lines 27 through 33a, if they apply to you.

 Figure any amount to be entered on the dotted line next to line 34 (see page xx).

 See the instructions for line 26 above.

3.

4.

 Be sure you have read the Exception above to see if you can use this worksheet

instead of Pub. 970 to figure your deduction.

Note. If the amount on line 3 is more than $65,000 ($130,000 if married filing jointly), stop here. You

cannot take the deduction for tuition and fees.

25

Draft as of

6/28/2002

OMB No. 1545-0068 Child and Dependent Care Expenses Form 2441

 Attach to Form 1040.

Department of the Treasury

Internal Revenue Service

Attachment

 See separate instructions. Sequence No. 21

Name(s) shown on Form 1040 Your social security number

Persons or Organizations Who Provided the Care—You must complete this part. 

(If you need more space, use the bottom of page 2.)

(b) Address

(number, street, apt. no., city, state, and ZIP code)

(d) Amount paid

(see instructions)

(c) Identifying number

(SSN or EIN) 1 (a) Care provider’sname

Credit for Child and Dependent Care Expenses

2

Add the amounts in column (c) of line 2. Do not enter more than $2,400 for one qualifying

person or $4,800 for two or more persons. If you completed Part III, enter the amount

from line 26

Enter your earned income

3

3

If married filing a joint return, enter your spouse’s earned income (if your spouse was a student

or was disabled, see the instructions); all others, enter the amount from line 4

4 4

Enter the smallest of line 3, 4, or 5

5

5

6

7 Enter the amount from Form 1040, line 36 7



Decimal

amount is

If line 7 is:

Decimal

amount is

If line 7 is:

But not

Over over But notOver over

$0—10,000 .30 $20,000—22,000 .24

10,000—12,000 .29 22,000—24,000 .23

12,000—14,000 .28 24,000—26,000 .22

14,000—16,000 .27 26,000—28,000 .21

16,000—18,000 .26 28,000—No limit .20

18,000—20,000 .25

Multiply line 6 by the decimal amount on line 8. If you paid 2001 expenses in 2002, see

the instructions 

9

For Paperwork Reduction Act Notice, see page 3 of the instructions. Form 2441 (2002)

Before you begin: You need to understand the following terms. See Definitions on page 1 of the instructions.

Cat. No. 11862M

Part I

Part II

Enter on line 8 the decimal amount shown below that applies to the amount on line 7

Did you receive

dependent care benefits? Yes

No

8

Complete only Part II below.

Complete Part III on the back next.





Caution. If the care was provided in your home, you may owe employment taxes. See the instructions for Form 1040, line 60.

.

(99)

Information about your qualifying person(s). If you have more than two qualifying persons, see the instructions.

(a) Qualifying person’s name

First Last

(b) Qualifying person’s social

security number

(c) Qualified expenses you

incurred and paid in 2002 for the

person listed in column (a)

8

6

● Dependent Care Benefits ● Qualifying Person(s) ● Qualified Expenses ● Earned Income

2002

10 Enter the amount from Form 1040, line 44, minus any amount on Form 1040, line 45 

Credit for child and dependent care expenses. Enter the smaller of line 9 or line 10

here and on Form 1040, line 46

11

9

10

11

Jim & Alice Post 000 00 1576
26

Draft as of

6/28/2002

Form 2441 (2002) Page 2

Dependent Care Benefits

Enter the total amount of dependent care benefits you received for 2002. This amount

should be shown in box 10 of your W-2 form(s). Do not include amounts that were

reported to you as wages in box 1 of Form(s) W-2

Enter the amount forfeited, if any (see the instructions)

Subtract line 13 from line 12

Enter the total amount of qualified expenses incurred

in 2002 for the care of the qualifying person(s)

13

15

Enter the smaller of line 14 or 15 16

14

Enter your earned income

15

17

If married filing a joint return, enter your spouse’s earned

income (if your spouse was a student or was disabled,

see the instructions for line 5); if married filing a separate

return, see the instructions for the amount to enter;

all others, enter the amount from line 17 18

Enter the smallest of line 16, 17, or 18

16

19

Excluded benefits. Enter here the smaller of the following:

17

20

● The amount from line 19 or

● $5,000 ($2,500 if married filing a separate return

and you were required to enter your spouse’s

earned income on line 18).

Taxable benefits. Subtract line 20 from line 14. Also, include this amount on Form 1040,

line 7. On the dotted line next to line 7, enter “DCB”

18

21

Part III



To claim the child and dependent care

credit, complete lines 22–26 below.

22

23

24

19

20

21

22 Enter $2,400 ($4,800 if two or more qualifying persons)

Subtract line 23 from line 22. If zero or less, stop. You cannot take the credit.

Exception. If you paid 2001 expenses in 2002, see the instructions for line 9

Enter the smaller of line 24 or 25. Also, enter this amount on line 3 on the front of this

form and complete lines 4–11

Enter the amount from line 20

26

23

24

26

13

14

12

12

Complete line 2 on the front of this form. Do not include in column (c) any benefits shown

on line 20 above. Then, add the amounts in column (c) and enter the total here

25

25

Form 2441 (2002)
27

Draft as of

6/05/2002

OMB No. 1545-1618 Education Credits

Form 8863

 See instructions. Department of the Treasury

Internal Revenue Service

Attachment

Sequence No. 50

Name(s) shown on return Your social security number

Hope Credit. Caution: The Hope credit may be claimed for no more than 2 tax years for the same student.

1

2

3

Lifetime Learning Credit

Form 8863 (2002)

Part I

Part II

3

(a) Student’s name

(as shown on page 1

of your tax return)

Cat. No. 25379M

Add the amounts in columns (d) and (f)

Tentative Hope credit. Add the amounts on line 2, columns (d) and (f). If you are claiming

the lifetime learning credit, go to Part II; otherwise, go to Part III 

8

Add the amounts on line 4, column (c), and enter the total

9

9

Enter the smaller of line 5 or $5,000

10

Subtract line 10 from line 9. If line 10 is equal to or more than

line 9, stop; you cannot take any education credits

10

12

16

17

4

11

11

15

For Paperwork Reduction Act Notice, see page 3.

(f) Enter one-half

of the amount in

column (e)

(e) Subtract

column (d) from

column (c)

(d) Enter the

smaller of the

amount in

column (c) or

$1,000

(c) Qualified

expenses

(but do not

enter more than

$2,000 for each

student). See

instructions

2

Caution: You

cannot take the

Hope credit and

the lifetime learning

credit for the same

student.

(a) Student’s name (as shown on page 1

of your tax return)

First name Last name

(c) Qualified

expenses. See

instructions

Tentative lifetime learning credit. Multiply line 6 by 20% (.20) and go to Part III 

5

6

7

5

6

7

Part III Allowable Education Credits

8 Tentative education credits. Add lines 3 and 7

Enter: $102,000 if married filing jointly; $51,000 if single, head of

household, or qualifying widow(er)

Enter the amount from Form 1040, line 36 (or Form 1040A, line 22)*

If line 11 is equal to or more than line 12, enter the amount from line 8 on line 14 and

go to line 15. If line 11 is less than line 12, divide line 11 by line 12. Enter the result as

a decimal (rounded to at least three places)

13

14 Multiply line 8 by line 13 

15 Enter the amount from Form 1040, line 44 (or Form 1040A, line 28) 

Enter the total, if any, of your credits from Form 1040, lines 45 through 47 (or from

Form 1040A, lines 29 and 30)

16

Subtract line 16 from line 15. If line 16 is equal to or more than line 15, stop; you cannot

take any education credits

17

18 Education credits. Enter the smaller of line 14 or line 17 here and on Form 1040,

line 48 (or Form 1040A, line 31)  18

14

13 .

(Hope and Lifetime Learning Credits)

(b) Student’s

social security

number (as

shown on page 1

of your tax return)

(b) Student’s social security

number (as shown on page

1 of your tax return)

Enter: $20,000 if married filing jointly; $10,000 if single, head of

household, or qualifying widow(er) 12

*See Pub. 970 for the amount to enter if you are filing Form 2555, 2555-EZ, or 4563 or you are excluding income from Puerto Rico.

 Attach to Form 1040 or Form 1040A.

2002

Last name

First name

Jim & Alice Post 000 00 1576
Record all answers on the tear-out Test Answer Sheet located in the front of the test

booklet.

28

Record all answers on the tear-out Test Answer Sheet located in the front of the test

booklet.

For questions B-16 through B-19, use the following scenario to complete 

a Form 1040 through line 71a only.

Brenda Bradford is a single mother of three children. She provides all 

the support for the children and will be filing as head of household. 

Brenda’s mother keeps the children during the day, so Brenda has no 

child care expenses.

The children’s names, date of birth, and social security numbers are:

Marco born 4/9/2000 SSN 000-00-4242

Malinda born 11/26/1994 SSN 000-00-3232

Mary born 7/5/1992 SSN 000-00-8541

B-16 What is the amount on Form 1040, Line 50?

a. 0

b. $553

c. $773

d. $853

e. $5,525

B-17 What is the amount on Form 1040, Line 61?

a. 0

b. $468

c. $553

d. $600

e. $1,800

B-18 What is the amount on Form 1040, Line 64?

a. 0

b. $1,833

c. $1,843

d. $1,854

e. $2,054

B-19 What is the amount on Form 1040, Line 66?

a. $553

b. $1,247

c. $1,408

d. $1,800

e. $10,350

30

Draft as of

7/31/2002

1

Control number

Retirement

plan Third-partysick pay Statutoryemployee

6

2

Employer’s name, address, and ZIP code

7 Allocated tips

Advance EIC payment

8

9 10

Wages, tips, other compensation Federal income tax withheld

Social security wages Social security tax withheld

11 12a

Employer’s state ID number

3 4

Employer identification number

Medicare wages and tips

Social security tips

13

5

Employee’s social security number

Employee’s first name and initial Nonqualified plans

Medicare tax withheld

15

14

16 17

Other

18

Employee’s address and ZIP code

State State wages, tips, etc. State income tax Locality name

Copy B To Be Filed with Employee’s FEDERAL Tax Return.

This information is being furnished to the Internal Revenue Service.

Department of the Treasury—Internal Revenue Service

Form

Dependent care benefits

See instructions for box 12

a

b

c

d

e

f

W-2 Wage and Tax

Statement 20 20

OMB No. 1545-0008

Last name C

o

d

e

12b

C

o

d

e

12c

C

o

d

e

Local wages, tips, etc. 19 Local income tax 20

12d

C

o

d

e

Safe, accurate,

FAST! Use

Visit the IRS Web Site

at www.irs.gov.

(Rev. February 2002)

Doane Industry

460 SE Dana Ct.

Portland, OR 97208

Brenda Bradford

5566 Berry

Portland, OR 97208

78-4555444 24,425.00 1,144.00

24,425.00 1,514.35

24,425.00 354.16

X

000-00-7666 468.00
31

Draft as of

4/23/2002

Department of the Treasury—Internal Revenue Service 1040 U.S. Individual Income Tax Return

For the year Jan. 1–Dec. 31, 2002, or other tax year beginning , 2002, ending , 20 OMB No. 1545-0074

Your first name and initial Last name Your social security number

(See

instructions

on page 19.)

L

A

B

E

L

H

E

R

E

If a joint return, spouse’s first name and initial Last name Spouse’s social security number

Use the IRS

label.

Otherwise,

please print

or type.

Home address (number and street). If you have a P.O. box, see page 19. Apt. no.

City, town or post office, state, and ZIP code. If you have a foreign address, see page 19.

Presidential

Election Campaign

1 Single

Filing Status 2 Married filing jointly (even if only one had income)

Check only

one box.

3

Qualifying widow(er) with dependent child (year

spouse died  ). (See page 19.)

6a Yourself. If your parent (or someone else) can claim you as a dependent on his or her tax

Exemptions return, do not check box 6a

b Spouse

(4) if qualifying

child for child tax

credit (see page 20)

c Dependents: (2) Dependent’s

social security number

(3) Dependent’s

relationship to (1) First name Last name you

If more than five

dependents,

see page 20.

d Total number of exemptions claimed

7 Wages, salaries, tips, etc. Attach Form(s) W-2 7

Income 8a Taxable interest. Attach Schedule B if required 8a

b Tax-exempt interest. Do not include on line 8a 8b Attach

Forms W-2 and

W-2G here.

Also attach

Form(s) 1099-R

if tax was

withheld.

9 Ordinary dividends. Attach Schedule B if required 9

10 Taxable refunds, credits, or offsets of state and local income taxes (see page 22) 10

11 Alimony received 11

12 Business income or (loss). Attach Schedule C or C-EZ 12

Enclose, but do

not attach, any

payment. Also,

please use

Form 1040-V.

13 Capital gain or (loss). Attach Schedule D if required. If not required, check here  13

14 Other gains or (losses). Attach Form 4797 14

15a IRA distributions 15a 15b b Taxable amount (see page 23)

16a Pensions and annuities 16a b Taxable amount (see page 23) 16b

17 Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E 17

18 Farm income or (loss). Attach Schedule F 18

19 Unemployment compensation 19

20a Social security benefits 20a b Taxable amount (see page 25) 20b

21 21

22 Add the amounts in the far right column for lines 7 through 21. This is your total income  22

IRA deduction (see page 27) 24

23

Archer MSA deduction. Attach Form 8853

26

25

One-half of self-employment tax. Attach Schedule SE

27

Self-employed health insurance deduction (see page 30)

26

28

27

Self-employed SEP, SIMPLE, and qualified plans

29

28

Penalty on early withdrawal of savings

30

29

Alimony paid b Recipient’s SSN 

Add lines 23 through 33a 34

30

Subtract line 34 from line 22. This is your adjusted gross income 

31

Adjusted

Gross

Income

35

If you did not

get a W-2,

see page 21. Form

Married filing separately. Enter spouse’s SSN above

and full name here. 

Cat. No. 11320B





Label

Form 1040 (2002)

IRS Use Only—Do not write or staple in this space.

Head of household (with qualifying person). (See page 19.) If

the qualifying person is a child but not your dependent, enter

this child’s name here. 

Other income. List type and amount (see page 27)

Moving expenses. Attach Form 3903

24

25

For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see page 72.

No. of boxes

checked on

6a and 6b

No. of children

on 6c who:

Dependents on 6c

not entered above

Add numbers

on lines

above 

● lived with you

● did not live with

you due to divorce

or separation

(see page 20)

32 32

Student loan interest deduction (see page 28)

31

33a

  Important!

Yes No

Note. Checking “Yes” will not change your tax or reduce your refund.

Do you, or your spouse if filing a joint return, want $3 to go to this fund? 

You must enter

your SSN(s) above.

No Yes

You Spouse

(See page 19.)

(99)

Tuition and fees deduction (see page XX)

34

33a

2002

4

5

35

Educator expenses (see page xx) 23

Brenda Bradford

5566 Berry

Portland, OR 97208

000 00 7666

X
32

Draft as of

4/23/2002

Itemized deductions (from Schedule A) or your standard deduction (see left margin)

Add lines 62 through 68. These are your total payments 

Form 1040 (2002) Page 2

36 Amount from line 35 (adjusted gross income) 36

37a Check if:

Tax and

Credits

Add the number of boxes checked above and enter the total here  37a

Single,

$4,700

If you are married filing separately and your spouse itemizes deductions, or

you were a dual-status alien, see page 31 and check here 

b

37b

38 38

39 Subtract line 38 from line 36 39

40

If line 36 is $103,000 or less, multiply $3,000 by the total number of exemptions claimed on

line 6d. If line 36 is over $103,000, see the worksheet on page 32

40

41 Taxable income. Subtract line 40 from line 39. If line 40 is more than line 39, enter -0- 41

42 42

46

47

52

Education credits. Attach Form 8863

45

50

Other credits. Check applicable box(es):

49

54

55

Add lines 45 through 53. These are your total credits

49

Subtract line 54 from line 44. If line 54 is more than line 44, enter -0- 

54

Self-employment tax. Attach Schedule SE

55

Other

Taxes

56

70

Social security and Medicare tax on tip income not reported to employer. Attach Form 4137

Tax on qualified plans, including IRAs, and other tax-favored accounts. Attach Form 5329 if required 58

57

59

Add lines 55 through 60. This is your total tax 

60 60

62 Federal income tax withheld from Forms W-2 and 1099 62

63 2002 estimated tax payments and amount applied from 2001 return 63

Payments

64

Amount paid with request for extension to file (see page 51) 67

66

Excess social security and tier 1 RRTA tax withheld (see page 51) 65

67

69

68 Other payments from:

71a 71a

72 72

If line 69 is more than line 61, subtract line 61 from line 69. This is the amount you overpaid

73 73

Amount of line 70 you want refunded to you 

Refund

74

Amount of line 70 you want applied to your 2003 estimated tax 

Estimated tax penalty (see page 52)

Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and

belief, they are true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.

74

You were 65 or older, Blind; Spouse was 65 or older, Blind.

a Form 3800

b Form 8801 c Specify

a Form 2439 b Form 4136

58

Household employment taxes. Attach Schedule H

59

68

Amount

You Owe

Sign

Here Your signature Date

Keep a copy

for your

records.

Spouse’s signature. If a joint return, both must sign. Date

Date Preparer’s SSN or PTIN Preparer’s

signature Check if

self-employed

Paid

Preparer’s

Use Only Firm’s name (or

yours if self-employed),

address, and ZIP code

EIN

Phone no.







Your occupation

Tax (see page 33). Check if any tax is from

Amount you owe. Subtract line 69 from line 61. For details on how to pay, see page 52 

b

Direct deposit?

See page 51

and fill in 71b,

71c, and 71d.

Routing number

Account number

c Checking Savings

a Form(s) 8814 Form 4972

b

d





69

48

45

Retirement savings contributions credit. Attach Form 8880

56

57

Advance earned income credit payments from Form(s) W-2

70



Child tax credit (see page XX)

Credits from:

48

52

50

Additional child tax credit. Attach Form 8812

65

66

Head of

household,

$6,900

Married filing

jointly or

Qualifying

widow(er),

$7,850

Married

filing

separately,

$3,925

Standard

Deduction

for—

Joint return?

See page 19.

Daytime phone number

( )

Earned income credit (EIC)

Credit for the elderly or the disabled. Attach Schedule R

43

44

46

Alternative minimum tax (see page 34). Attach Form 6251

Add lines 42 and 43 

Credit for child and dependent care expenses. Attach Form 2441

47

If you have a

qualifying

child, attach

Schedule EIC.

43

44

64

Spouse’s occupation

( )

Form 1040 (2002)

● People who

checked any

box on line

37a or 37b or

who can be

claimed as a

dependent,

see page 31.

● All others:

Designee’s

name 

Do you want to allow another person to discuss this return with the IRS (see page 53)? Third Party

Designee Phone

no.  ( )

Yes. Complete the following. No

Personal identification

number (PIN) 

53

Foreign tax credit. Attach Form 1116 if required

53

a Form 8396 b Form 8859

51 Adoption credit. Attach Form 8839 51

61 61

Type:
33

Draft as of

7/31/2002

- 37 -

Form 1040—Line 50

Need more information or forms? See page 7.

Line 50—Child Tax Credit

What Is the Child Tax Credit?

This credit is for people who have a qualifying child as defined

in the instructions for line 6c, column (4), on page 20. It is in

addition to the credit for child and dependent care expenses on

Form 1040, line 46, and the earned income credit on

Form 1040, line 64.

Three Steps To Take the Child Tax Credit!

Step 1. Make sure you have a qualifying child for the child

tax credit. See the instructions for line 6c,

column (4), on page 20.

Step 2. Make sure you checked the box in column (4) of

line 6c on Form 1040 for each qualifying child.

Step 3. Answer the questions on this page to see if you may

use the worksheet on page 38 to figure your credit or

if you must use Pub. 972, Child Tax Credit. If you

need Pub. 972, see page 7.

Who Must Use Pub. 972

1. Are you excluding income from Puerto Rico or are you

filing any of the following forms?

● Form 2555 or 2555-EZ (relating to foreign earned

income)

● Form 4563 (exclusion of income for residents of

American Samoa)

No. Continue Yes.

You must use Pub. 972 to

figure your credit.

2. Is the amount on Form 1040, line 36, more than the amount

shown below for your filing status?

● Married filing jointly – $110,000

● Single, head of household, or qualifying widow(er) –

$75,000

● Married filing separately – $55,000

3. Are you claiming any of the following credits?

● Adoption credit, Form 8839 (see the instructions for

Form 1040, line 51, on page 39)

● Mortgage interest credit, Form 8396 (see the instructions

for Form 1040, line 52, on page 39)

● District of Columbia first-time homebuyer credit,

Form 8859

No. Use the

worksheet on

page 38 to figure

your child tax credit.

Yes. You must use

Pub. 972 to figure your

child tax credit. You will

also need the form(s)

listed above for any

credit(s) you are claiming.



STOP

No. Continue Yes.

You must use Pub. 972 to

figure your credit.



STOP

Questions Pub.

972
34

Draft as of

7/31/2002

- 38 -

Form 1040—Line 50

Need more information or forms? See page 7.

Child Tax Credit Worksheet—Line 50

1040

Yes. STOP

Keep for Your Records

Do not use this worksheet if you answered “Yes” to question 1, 2, or 3 on page 37.

Instead, use Pub. 972.

1.

2.

3.

4.

5.

1

2

Number of qualifying children: $600. Enter the result.

Enter the amount from Form 1040, line 44.

Add the amounts from Form 1040:

Line 45

Line 47

Line 49 + Enter the total.

Are the amounts on lines 2 and 3 the same?

You cannot take this credit because there is no tax to reduce. However, see

the TIP below before completing the rest of your Form 1040.

No. Subtract line 3 from line 2.

Is the amount on line 1 more than the amount on line 4?

Yes. Enter the amount from line 4.

Also, see the TIP below.

No. Enter the amount from line 1.

This is your child tax

credit.

Enter this amount on

Form 1040, line 50.

You may be able to take the additional child tax credit

on Form 1040, line 66, if you answered “Yes” on line 4

or line 5 above.

● First, complete your Form 1040 through line 65.

● Then, use Form 8812 to figure any additional child

tax credit.

+

3

4

 5



Line 46 +

Line 48 +
35

Draft as of

7/31/2002

- 41 -

Form 1040—Line 64

Need more information or forms? See page 7.

Step 3

Step 2

Line 64

Earned Income Credit (EIC)

What Is the EIC?

The EIC is a credit for certain people who work. The credit may

give you a refund even if you do not owe any tax.

If you take the EIC even though you are not eligible

and it is determined that your error is due to reckless

or intentional disregard of the EIC rules, you will not

be allowed to take the credit for 2 years even if you

are otherwise eligible to do so. If you fraudulently take the EIC,

you will not be allowed to take the credit for 10 years. You may

also have to pay penalties.

All Filers

1. If, in 2002:

Yes. Continue No.

You cannot take the credit.

1. Add the amounts from

Form 1040:



STOP

No. Continue Yes.

You must

use Pub. 596

to see if you

can take the

credit.



STOP

To Take the EIC:

● Follow the steps below.

● Complete the worksheet that applies to you or let the IRS

figure the credit for you.

● If you have a qualifying child, complete and attach

Schedule EIC.

Step 1

2. Do you, and your spouse if filing a joint return, have a

social security number that allows you to work or is valid

for EIC purposes (see page 44)?

Yes. Continue No.

 You cannot take the credit.

STOP

Put “No” on the dotted

line next to line 64.

3. Is your filing status married filing separately?

Yes. No. Continue

You cannot take

the credit.



STOP

4. Are you filing Form 2555 or 2555-EZ (relating to foreign

earned income)?

Yes.

You cannot take

the credit.

STOP

5. Were you a nonresident alien for any part of 2002?

Yes. See Nonresident

Aliens on page 44.

No. Go to Step 2.

Investment Income

Line 8a

Line 8b

Line 9

Line 13

+

Investment Income

+

+

2. Is your investment income more than $2,550?

Yes. Continue No. Skip the next  question; go to Step 3.

3. Are you filing Form 4797 (relating to sales of business

property)?

Yes. See Form 4797

Filers on page 43.

No.

You cannot take the credit.

STOP

Who Must Use Pub. 596

Some people must use Pub. 596, Earned Income Credit, to see

if they can take the credit. To see if you must use Pub. 596,

answer the following questions.

1. Are you filing Schedule E?

No. Continue Yes.



2. Are you reporting income or a loss

from the rental of personal property

not used in a trade or business?

4. Did a child live with you in 2002?

Yes. Go to Step 4

on page 42.

No. Go to Step 5 on

page 42.





Pub.

596

To get

Pub. 596, see

page 7.

=

No. Continue Yes.



3. Are you reporting income on Form

1040, line 21, from Form 8814

(relating to election to report child’s

interest and dividends)?



● 2 children lived with you, is the amount on Form 1040, line

36, less than $33,178 ($34,178 if married filing jointly)?

● No children lived with you, is the amount on Form 1040,

line 36, less than $11,060 ($12,060 if married filing

jointly)?

● 1 child lived with you, is the amount on Form 1040, line

36, less than $29,201 ($30,201 if married filing jointly)?

No. Continue


36

Draft as of

7/31/2002

- 42 -

Form 1040—Line 64

Need more information or forms? See page 7.

Step 4

Continued from page 41

1. Look at the qualifying child conditions above. Could you, or

your spouse if filing a joint return, be a qualifying child of

another person in 2002?

Yes. No. Continue

You cannot take the

credit. Put “No” on

the dotted line next

to line 64.



STOP

2. Do you have at least one child who meets the above

conditions to be your qualifying child?

Yes. Go to

question 3.

No. Skip question 3; go to

Step 5, question 2.

3. Does the child meet the conditions to be a qualifying child

of any other person (other than your spouse if filing a joint

return) for 2002?

Yes. See Qualifying

Child of More Than

One Person on

page 44.

Qualifying Child

1. Look at the qualifying child conditions in Step 4. Could

you, or your spouse if filing a joint return, be a qualifying

child of another person in 2002?

Yes. No. Continue



2. Can you, or your spouse if filing a joint return, be claimed

as a dependent on someone else’s 2002 tax return?

You cannot take the

credit. Put “No” on

the dotted line next

to line 64.

STOP

A qualifying child is a child who is...

Your son, daughter, adopted child, stepchild, or grandchild

Note. If the child was married, see page 44.

was at the end of 2002...

Under age 19

or

Under age 24 and a student (see page 44)

Any age and permanently and totally disabled (see page 44)

who...

Lived with you in the United States for more than half

of 2002.

If the child did not live with you for the

required time, see Exception to “Time Lived With You”

Condition on page 44.

No. This child is your

qualifying child. The child

must have a social security

number as defined on page

44 unless the child was

born and died in 2002.

Skip Step 5; go to Step 6

on page 43.

Step 5 Filers Without a Qualifying Child

Yes. No. Continue

You cannot take 

the credit.

STOP

3. Were you, or your spouse if filing a joint return, at least

age 25 but under age 65 at the end of 2002?

Yes.

You cannot take the credit.

Put “No” on the dotted

line next to line 64.

Continue



No. STOP

4. Was your home, and your spouse’s if filing a joint return, in

the United States for more than half of 2002? Members of

the military stationed outside the United States, see page 44

before you answer.

Yes. Go to Step 6

on page 43. You cannot take the credit.

Put “No” on the dotted

line next to line 64.

No. STOP

AND

AND

or

or

Your brother, sister, stepbrother, stepsister, or a descendent of

your brother, sister, etc. (for example, your niece or nephew),

whom you cared for as your own child

or

A foster child (any child placed with you by an authorized

placement agency whom you cared for as your own child)
37

Draft as of

7/31/2002

- 43 -

Form 1040—Line 64

Need more information or forms? See page 7.

Step 6

Continued from page 42

1. Do you want the IRS to figure the credit for you?

No. Go to Worksheet A

on page 45.

3. Were you self-employed, or are you filing Schedule SE

because you had church employee income, or are you filing

Schedule C or C-EZ as a statutory employee?

Yes. Skip question 4

and Step 7; go to

Worksheet B on

page 46.

Earned Income

Step 7 How To Figure the Credit

2. Figure earned income:

Form 1040, line 7

Earned Income =

–

Subtract, if included on line 7, any:

● Taxable scholarship or fellowship grant

not reported on a W-2 form

● Amount paid to an inmate in a penal

institution for work (put “PRI” and

the amount subtracted on the dotted

line next to line 7 of Form 1040) 

Yes. See Credit

Figured by the IRS on

this page.

Definitions and Special Rules (listed in alphabetical order)

Adopted Child. Any child placed with you by an authorized

placement agency for legal adoption. An authorized placement

agency includes any person authorized by state law to place

children for legal adoption. The adoption does not have to be

final.

Clergy. If you are filing Schedule SE and the amount on line 2

of that schedule includes an amount that was also reported on

Form 1040, line 7:

1. Put “Clergy” on the dotted line next to line 64 of

Form 1040.

2. Determine how much of the amount on Form 1040,

line 7, was also reported on Schedule SE, line 2.

3. Subtract that amount from the amount on Form 1040,

line 7. Enter the result in the first space of Step 6, line 2.

Credit Figured by the IRS. To have the IRS figure the credit

for you:

1. Put “EIC” on the dotted line next to line 64 of

Form 1040.

4. Be sure to answer “Yes” on line 3 of Step 6.

1. Are you filing Schedule SE because you had church

employee income of $108.28 or more?

Yes. See Church

Employees on this page.

Church Employees. Determine how much of the amount on

Form 1040, line 7, was also reported on Schedule SE, line 5a.

Subtract that amount from the amount on Form 1040, line 7,

and enter the result in the first space of Step 6, line 2. Be sure

to answer “Yes” on line 3 of Step 6.

No. Continue



(Continued on page 44)

● Amount received as a pension or annuity

from a nonqualified deferred

compensation plan or a nongovernmental

section 457 plan (put “DFC” and the

amount subtracted on the dotted line next

to line 7 of Form 1040). This amount

may be shown in box 11 of your W-2

form. If you received such an amount but

box 11 is blank, contact your employer

for the amount received as a pension or

annuity.

No. Continue



4. If you have:

Yes. Go to Step 7.

● 2 or more qualifying children, is your earned income less

than $33,178 ($34,178 if married filing jointly)?

● 1 qualifying child, is your earned income less than

$29,201 ($30,201 if married filing jointly)?

● No qualifying children, is your earned income less than

$11,060 ($12,060 if married filing jointly)?

You cannot take the credit.

No. STOP

2. If you have a qualifying child, complete and attach

Schedule EIC. If your EIC for a year after 1996 was

reduced or disallowed, see Form 8862, Who Must File on

page 44.

Exception to “Time Lived With You” Condition. A child

is considered to have lived with you for all of 2002 if the child

was born or died in 2002 and your home was this child’s home

for the entire time he or she was alive in 2002. Temporary

absences, such as for school, vacation, medical care, or

detention in a juvenile facility, count as time lived at home. If

your child is presumed to have been kidnapped by someone

who is not a family member, see Pub. 596 to find out if that

child is a qualifying child for the EIC. To get Pub. 596, see

page 7. If you were in the military stationed outside the United

States, see Members of the Military on page 44.

Form 4797 Filers. If the amount on Form 1040, line 13,

includes an amount from Form 4797, you must use Pub. 596 to

see if you can take the EIC. To get Pub. 596, see page 7.

Otherwise, stop; you cannot take the EIC.

39

Draft as of

7/31/2002

- 45 -

Form 1040—Line 64

Need more information or forms? See page 7.

Worksheet A—Earned Income Credit (EIC)—Line 64

1040

Yes. Skip line 5; enter the amount from line 2 on line 6.

STOP

Keep for Your Records

Before you begin: Be sure you are using the correct worksheet. Do not use this worksheet if you

were self-employed, or you are filing Schedule SE because you had church

employee income, or you are filing Schedule C or C-EZ as a statutory

employee. Instead, use Worksheet B on page 46.

1.

2.

3.

4.

5.

Enter your earned income from Step 6 on page 43. 1

Look up the amount on line 1 above in the EIC Table on pages 48–53

to find the credit. Be sure you use the correct column for your filing

status and the number of children you have. Enter the credit here.

Enter the amount from Form 1040, line 36.

Are the amounts on lines 3 and 1 the same?

No. Go to line 5.

If you have:

Yes. Leave line 5 blank; enter the amount from line 2 on line 6.

No. Look up the amount on line 3 in the EIC Table on

pages 48–53 to find the credit. Be sure you use the correct

column for your filing status and the number of children

you have. Enter the credit here.

Enter this amount on

Form 1040, line 64.

3

6

Part 3

Part 1

Part 2

All Filers Using

Worksheet A

Filers Who

Answered

“No” on

Line 4

Your Earned

Income Credit

2

If line 2 is zero, You cannot take the credit.

Put “No” on the dotted line next to line 64.

● No qualifying children, is the amount on line 3 less than $6,150

($7,150 if married filing jointly)?

● 1 or more qualifying children, is the amount on line 3 less than

$13,550 ($14,550 if married filing jointly)?

Look at the amounts on lines 5 and 2.

Then, enter the smaller amount on line 6.

5

6. This is your earned income credit.

Reminder—

If you have a qualifying child, complete and attach Schedule EIC.

If your EIC for a year after 1996 was reduced or disallowed, see

page 44 to find out if you must file Form 8862 to take the credit

for 2002.

  

EIC

1040


40

Draft as of

5/28/2002

 OMB No. 1545-0074

SCHEDULE EIC Earned Income Credit (Form 1040A or 1040)

Department of the Treasury

Internal Revenue Service

Attachment

Sequence No. 43

Qualifying Child Information

For Paperwork Reduction Act Notice, see Form 1040A

or 1040 instructions.

Cat. No. 13339M Schedule EIC (Form 1040A or 1040) 2002

Before you begin: See the instructions for Form 1040A, line 41, or Form 1040, line 64, to make sure that

(a) you can take the EIC and (b) you have a qualifying child.

Qualifying Child Information

● It will take us longer to process your return and issue your refund if you do not fill in all lines that apply

for each qualifying child.

3

4

2

5

6

1 Child’s name

Child’s year of birth

Child’s SSN

If the child was born before 1984—

Child’s relationship to you

Number of months child lived with

you in the United States during 2002

months

Yes.

months

Was the child under age 24 at the end

of 2002 and a student?

Was the child permanently and totally

disabled during any part of 2002?

a

b

Yes.

First name Last name First name Last name

Name(s) shown on return Your social security number

(99)

EIC

1040A

1040

Complete and attach to Form 1040A or 1040

only if you have a qualifying child.

● Be sure the child’s name on line 1 and social security number (SSN) on line 2 agree with the child’s

social security card. Otherwise, at the time we process your return, we may reduce or disallow your

EIC. If the name or SSN on the child’s social security card is not correct, call the Social Security

Administration at 1-800-772-1213.

Child 1 Child 2

If you have more than two qualifying children, you

only have to list two to get the maximum credit.

The child must have an SSN as defined on page 42

of the Form 1040A instructions or page 44 of the

Form 1040 instructions unless the child was born and

died in 2002. If your child was born and died in 2002

and did not have an SSN, enter “Died” on this line

and attach a copy of the child’s birth certificate.

Year

If born after 1983, skip lines 4a

and 4b; go to line 5.

Year

No. No.

Go to line 5. Go to line 5. Continue Continue

Yes. Yes. No. No.

Continue Continue The child is not a

qualifying child.

The child is not a

qualifying child.

● If the child lived with you for more than half of

2002 but less than 7 months, enter “7”.

● If the child was born or died in 2002 and your

home was the child’s home for the entire time he

or she was alive during 2002, enter “12”.

Do not enter more than 12 months. Do not enter more than 12 months.

You may also be able to take the additional child tax credit if your child (a) was under age 17 at the end of 2002, (b) is

claimed as your dependent on line 6c of Form 1040A or Form 1040, and (c) is a U.S. citizen or resident alien. For more

details, see the instructions for line 42 of Form 1040A or line 66 of Form 1040.

. . . . . . . . . .

● If you take the EIC even though you are not eligible, you may not be allowed to take the credit for up

to 10 years. See back of schedule for details.

If born after 1983, skip lines 4a

and 4b; go to line 5.

(for example, son, daughter, grandchild,

foster child, etc.)

2002

Brenda Bradford 000 00 7666
41

Draft as of

5/28/2002

OMB No. 1545-1620 8812 Additional Child Tax Credit Form

Complete and attach to Form 1040 or Form 1040A. Department of the Treasury

Internal Revenue Service

Attachment

Sequence No. 47

Name(s) shown on return Your social security number

For Paperwork Reduction Act Notice, see back of form. Cat. No. 10644E Form 8812 (2002)

3

2

4

6

Enter the total of the withheld social security and Medicare taxes from Form(s)

W-2, boxes 4 and 6. If married filing jointly, include your spouse’s amounts

with yours. If you worked for a railroad, see the instructions on back

Add lines 7 and 8

1

Enter the total of the amounts from Form 1040, lines

29 and 57, plus any uncollected social security and

Medicare or tier 1 RRTA taxes included on line 61.

Enter -0-.

Enter the total of the amounts from Form 1040, lines

64 and 65.

Enter the total of the amount from Form 1040A, line

41, plus any excess social security and tier 1 RRTA

taxes withheld that you entered to the left of line 43

(see the instructions on back).

Enter the amount from line 1 of your Child Tax Credit Worksheet on page 38 of the Form 1040 instructions

or page 37 of the Form 1040A instructions. If you used Pub. 972, enter the amount from line 8 of the

worksheet on page 3 of the publication

Enter the amount from Form 1040, line 50, or Form 1040A, line 33

Subtract line 2 from line 1. If zero, stop; you cannot take this credit

8

9



6

 1040A filers:

1040 filers:

1040 filers:

1040A filers:

1

2

13

1040

1040A

. . . . . . . . . .

Enter this amount on

Form 1040, line 66, or

Form 1040A, line 42.





8812

1040

1040A

. . . . . . . . . .

3

Enter your total taxable earned income. See the instructions on back

5 Is the amount on line 4 more than $10,350?

No.

Yes. Subtract $10,350 from the amount on line 4. Enter the result

Leave line 5 blank and enter -0- on line 6.

4

5

Multiply the amount on line 5 by 10% (.10) and enter the result

7

Next. Do you have three or more qualifying children?

No. If line 6 is zero, stop; you cannot take this credit. Otherwise, skip Part II and enter the

smaller of line 3 or line 6 on line 13.

Yes.

7

8

9

10

10

11 Subtract line 10 from line 9. If zero or less, enter -0- 11

12 Enter the larger of line 6 or line 11 here 12

Next, enter the smaller of line 3 or line 12 on line 13.

13 This is your additional child tax credit

Part III

Part I

Part II

All Filers

Certain Filers Who Have Three or More Qualifying Children

Your Additional Child Tax Credit

If line 6 is equal to or more than line 3, skip Part II and enter the amount from line 3 on

line 13. Otherwise, go to line 7.

2002

Brenda Bradford 000 00 7666

Record all answers on the tear-out Test Answer Sheet located in the front of the test

booklet.

43

Record all answers on the tear-out Test Answer Sheet located in the front of the test

booklet.

PART C – Pension Earner

C-1 The social security benefits worksheet uses all of the following items to compute taxable 

social security except:

a. Tax-exempt interest

b. Capital losses

c. Student loan interest deduction

d. Alimony Paid

e. None of the above

C-2 Janet received a Form 1099-R with $18,445 in Box 1 and $42,500 in Box 9b. Janet is 

single and was 60 years old in November 2001 when she retired. When you complete 

her Simplified Method Worksheet, what is the number you put on line 3 of the

worksheet?

a. 260

b. 240

c. 310

d. 300

e. None of the above

C-3 Frank and Barbara are both 62 years old and file a joint return. They have owned and 

lived in their main home for 27 years. In 2002, they sold their home for $675,000. The 

adjusted basis in the home sold was $210,000. They are currently renting a

condominium and do not know when they might purchase another home. They did not 

receive a Form 1099-S for the sale. How do they treat the sale of this home?

a. The gain was less than $500,000 and is not reportable.

b. They must report the sale on Schedule D and show the exclusion amount

c. They must report the sale on Schedule D because they are over 55.

d. None of the above

e. Both b and c

C-4 Which statement best describes the Form 1040, Schedule R?

a. A credit for persons over 65 with low incomes

b. A credit reduced by taxable social security or taxable railroad retirement benefits

c. A credit for a single person, under 65 on disability

d. A credit for persons 65 or older or persons under 65 and totally and permanently 

disabled

e. None of the above
Record all answers on the tear-out Test Answer Sheet located in the front of the test

booklet.

44

Record all answers on the tear-out Test Answer Sheet located in the front of the test

booklet.

C-5 Lois paid $2,200 for 200 shares of PDQ stock (including commission). Later, Lois 

received 20 additional shares from the company as a stock dividend. In 2002, she sold 

20 shares and kept the rest. What is the total cost basis of the stock she sold?

a. $0

b. $100

c. $200

d. $220

e. $2,000

C-6 John hands you a Form 1099-DIV from PQR Insurance Company showing proceeds 

from the sale of stock of $1,840 and withholding of $368. He tells you he never bought 

stock in this company but does have a life insurance policy through them that he took 

out three years ago. A note on the form says “Demutualization.” Which statements are 

true?

a. His holding period in this transaction is short term.

b. His holding period in this transaction is long term.

c. His cost basis is 20% of the premiums paid before the stock was sold.

d. His cost basis is zero.

e. Both b and d

For question C-7, complete the Form 1040, Simplified Method Worksheet using the

following scenario.

Jim Brown is age 63 and single. He received his first pension check for $1,700 on 

September 1, 2002, and the same amount each month thereafter. His cost in the plan 

was $18,500.

C-7 What amount will be shown on his Form 1040, Line 16b?

a. $0

b. $260

c. $285

d. $1,700

e. $6,515
45

- 24 -

Form 1040—Lines 16a and 16b

Need more information or forms? See page 7.

Attach Form(s) 1099-R to

Form 1040 if any Federal income

tax was withheld.

Fully Taxable Pensions and

Annuities

If your pension or annuity is fully taxable,

enter it on line 16b; do not make an entry

on line 16a. Your payments are fully taxable

if either of the following applies.

● You did not contribute to the cost (see

page 25) of your pension or annuity or

● You got your entire cost back tax free

before 2002.

Fully taxable pensions and annuities also

include military retirement pay shown on

Form 1099-R. For details on military disability pensions, see Pub. 525. If you received a Form RRB-1099-R, see Pub. 575

to find out how to report your benefits.

Partially Taxable Pensions and

Annuities

Enter the total pension or annuity payments

you received in 2002 on line 16a. If your

Form 1099-R does not show the taxable

amount, you must use the General Rule explained in Pub. 939 to figure the taxable

part to enter on line 16b. But if your annuity

starting date (defined on page 25) was after

July 1, 1986, see page 25 to find out if you

must use the Simplified Method to figure

the taxable part.

You can ask the IRS to figure the taxable

part for you for an $85 fee. For details, see

Pub. 939.

(Continued on page 25)

Simplified Method W

Draft as of

7/31/2002

orksheet—Lines 16a and 16b Keep for Your Records

Enter the total pension or annuity payments received in 2002. Also, enter this amount on Form 1040,

line 16a

1.

2. Enter your cost in the plan at the annuity starting date

IF the age at annuity starting date

(see page 25) was . . .

3.

before November 19, 1996,

enter on line 3 . . .

55 or under 300

56–60 260

61–65 240

66–70 170

71 or older 120

4. Divide line 2 by the number on line 3

Multiply line 4 by the number of months for which this year’s payments were made.

If your annuity starting date was before 1987, skip lines 6 and 7 and enter this

amount on line 8. Otherwise, go to line 6

5.

6. Enter the amount, if any, recovered tax free in years after 1986

7. Subtract line 6 from line 2

8. Enter the smaller of line 5 or line 7

Taxable amount. Subtract line 8 from line 1. Enter the result, but not less than zero. Also, enter this amount

on Form 1040, line 16b. If your Form 1099-R shows a larger amount, use the amount on this line instead

of the amount from Form 1099-R

9.

Note. If you had more than one partially taxable pension or annuity, figure the taxable part of each separately. Enter the total of the

taxable parts on Form 1040, line 16b. Enter the total pension or annuity payments received in 2002 on Form 1040, line 16a.

1.

2.

3.

4.

5.

6.

7.

8.

9.

Enter the appropriate number from Table 1 below. But if your annuity starting date

was after 1997 and the payments are for your life and that of your beneficiary,

enter the appropriate number from Table 2 below

Table 1 for Line 3 Above

AND your annuity starting date was—

after November 18, 1996,

enter on line 3 . . .

360

310

260

210

160

IF the combined ages at annuity starting

date (see page 25) were . . . THEN enter on line 3 . . .

110 or under 410

111–120 360

121–130 310

131–140 260

141 or older 210

Table 2 for Line 3 Above

Before you begin:  If you are the beneficiary of a deceased employee or former employee who died

before August 21, 1996, see Pub. 939 to find out if you are entitled to a death

benefit exclusion of up to $5,000. If you are, include the exclusion in the amount

entered on line 2 below.
Record all answers on the tear-out Test Answer Sheet located in the front of the test

booklet.

46

Record all answers on the tear-out Test Answer Sheet located in the front of the test

booklet.

For questions C-8 through C-10, complete Form 1040 through Line 20b using the scenario below. Do not complete the rest of the return.

Robert J. (born 11/26/1921) and Ann M. Butler (born 8/26/1929) are retired and filing a 

joint tax return. He retired from a railway career in 1981 when the 3-year rule was in 

effect. They both have Forms RRB-1099/1099R from the railroad. Ann has a Form

1099-R from her banking career and a Form SSA-1099 from Social Security.

They received $6,212.76 interest from Franklin Savings Bank. They also received 

$1400 in tax-exempt interest from a Helena, Montana, municipal bond. They have no 

other adjustments to income.

C-8 How much taxable pension income will be reported on Form 1040, Line 16b?

a. $12,643

b. $19,255

c. $19,739

d. $19,939

e. $19,999

C-9 What amount is on the Social Security Benefits Worksheet, Line 5?

a. $25,668

b. $27,068

c. $35,442

d. $36,642

e. None of the above

C-10 How much of their combined Social Security and RRB Social Security-equivalent

benefits will be taxable on Form 1040, Line 20b?

a. $2,221

b. $2,231

c. $2,321

d. $2,421

e. $4,461
47

Draft as of

7/31 /2002

PAYER’S NAME, STREET ADDRESS, CITY, STATE, AND ZIP CODE

UNITED STATES RAILROAD RETIREMENT BOARD

844 N RUSH ST CHICAGO IL 60611-2092

PAYER’S FEDERAL IDENTIFYING NO. 36-3314600

1. Claim Number and Payee Code

2. Recipient’s Identification Number

Recipient’s Name, Street Address, City, State, and Zip Code

FORM RRB-1099

3.

Social Security Equivalent Benefit

Portion of Tier 1 Repaid to RRB in 2002

Net Social Security Equivalent Benefit

Portion of Tier 1 Paid in 2002

Workers’ Compensation Offset in 2002

Social Security Equivalent Benefit

Portion of Tier 1 Paid for 2000

Social Security Equivalent Benefit

Portion of Tier 1 Paid for 1999

Social Security Equivalent Benefit

Portion of Tier 1 Paid for Years

Prior to 1999

Federal Income Tax Withheld

PAYMENTS BY THE 

RAILROAD RETIREMENT BOARD

DO NOT ATTACH TO YOUR INCOME TAX RETURN

Gross Social Security Equivalent Benefit

Portion of Tier 1 Paid in 2002

4.

5.

6.

7.

8.

9.

10.

COPY C -

FOR

RECIPIENT’S

RECORDS

THIS

INFORMATION

IS BEING

FURNISHED

TO THE

INTERNAL

REVENUE

SERVICE.

11. Medicare Premium Total

2002

Robert Butler

10 Salem Ave.

Omaha, NE 68108

000-00-4818

000-00-4818

10,800.00

0

10,800.00

12.00

0 600.00

Substitute RRB-1099-R

Recipient Name: Robert Butler

Box 4, Contributory Amount Paid: 9,187.32

Box 6, Supplemental Annuity: 516.00

Box 7, Total Gross Paid: 9,703.32

Box 8, Repayments: 0

Box 9, Federal Income Tax Withheld: 0

Substitute RRB-1099-R

Recipient Name: Ann Butler

Box 4, Contributory Amount Paid: 2,939.64

Box 6, Supplemental Annuity: 0

Box 7, Total Gross Paid: 2,939.64

Box 8, Repayments: 0

Box 9, Federal Income Tax Withheld: 1,200.00
48

Draft as of

7/31 /2002

FORM SSA-1099 – SOCIAL SECURITY BENEFIT STATEMENT

● PART OF YOUR SOCIAL SECURITY BENEFITS SHOWN IN BOX 5 MAY BE TAXABLE INCOME.

● SEE THE REVERSE FOR MORE INFORMATION.

Box 1. Name Box 2. Beneficiary’s Social Security Number

Box 3. Benefits Paid in 2002 Box 4. Benefits Repaid to SSA in 2002 Box 5. Net Benefits for 2002 (Box 3 minus Box 4)

DESCRIPTION OF AMOUNT IN BOX 3 DESCRIPTION OF AMOUNT IN BOX 4

Box 7. Address

Box 8. Claim Number (Use this number if you need to contact SSA.)

Form SSA-1099-SM (1-2002) DO NOT RETURN THIS FORM TO SSA OR IRS

Box 6. Voluntary Federal Income Tax Withholding

2002

Ann Butler

10 Salem Ave.

Omaha, NE 68108

000-00-6818

0

Ann Butler

8,748.00 0 8,748.00

NONE

7/31/2002

Draft as of Employee contributions

or insurance premiums

CORRECTED (if checked)

PAYER’S name, street address, city, state, and ZIP code 1 Gross distribution Distributions From

Pensions, Annuities,

Retirement or

Profit-Sharing

Plans, IRAs,

Insurance

Contracts, etc.

$

2a Taxable amount

$

Total

distribution

Taxable amount

not determined

2b

RECIPIENT’S identification

number

PAYER’S Federal identification

number

3 Capital gain (included

in box 2a)

4 Federal income tax

withheld

$ $

RECIPIENT’S name Net unrealized

appreciation in

employer’s securities

5 6

$ $

Distribution

code

Street address (including apt. no.) 7 8 Other

%

City, state, and ZIP code

Account number (optional) 10 State tax withheld 11 State/Payer’s state no.

$

13 Local tax withheld 14 Name of locality

$

Form 1099-R Department of the Treasury - Internal Revenue Service

12

15

State distribution

Local distribution

$

Copy B

Report this

income on your

Federal tax

return. If this

form shows

Federal income

tax withheld in

box 4, attach

this copy to

your return.

This information is

being furnished to

the Internal

Revenue Service.

$

$

$

$ $

$

OMB No. 1545-0119

Your percentage of total

distribution

9a

%

Form 1099-R

9b Total employee contributions

$

IRA/

SEP/

SIMPLE

2002

The Greenville Trust

50 S. Jackson

Omaha, NE 68108

Ann Butler

10 Salem Ave.

Omaha, NE 68108

78-4646464 000-00-6818

6,611.92

6,611.92

0 0

7
49

Draft as of

4/23/2002

Department of the Treasury—Internal Revenue Service 1040 U.S. Individual Income Tax Return

For the year Jan. 1–Dec. 31, 2002, or other tax year beginning , 2002, ending , 20 OMB No. 1545-0074

Your first name and initial Last name Your social security number

(See

instructions

on page 19.)

L

A

B

E

L

H

E

R

E

If a joint return, spouse’s first name and initial Last name Spouse’s social security number

Use the IRS

label.

Otherwise,

please print

or type.

Home address (number and street). If you have a P.O. box, see page 19. Apt. no.

City, town or post office, state, and ZIP code. If you have a foreign address, see page 19.

Presidential

Election Campaign

1 Single

Filing Status 2 Married filing jointly (even if only one had income)

Check only

one box.

3

Qualifying widow(er) with dependent child (year

spouse died  ). (See page 19.)

6a Yourself. If your parent (or someone else) can claim you as a dependent on his or her tax

Exemptions return, do not check box 6a

b Spouse

(4) if qualifying

child for child tax

credit (see page 20)

c Dependents: (2) Dependent’s

social security number

(3) Dependent’s

relationship to (1) First name Last name you

If more than five

dependents,

see page 20.

d Total number of exemptions claimed

7 Wages, salaries, tips, etc. Attach Form(s) W-2 7

Income 8a Taxable interest. Attach Schedule B if required 8a

b Tax-exempt interest. Do not include on line 8a 8b Attach

Forms W-2 and

W-2G here.

Also attach

Form(s) 1099-R

if tax was

withheld.

9 Ordinary dividends. Attach Schedule B if required 9

10 Taxable refunds, credits, or offsets of state and local income taxes (see page 22) 10

11 Alimony received 11

12 Business income or (loss). Attach Schedule C or C-EZ 12

Enclose, but do

not attach, any

payment. Also,

please use

Form 1040-V.

13 Capital gain or (loss). Attach Schedule D if required. If not required, check here  13

14 Other gains or (losses). Attach Form 4797 14

15a IRA distributions 15a 15b b Taxable amount (see page 23)

16a Pensions and annuities 16a b Taxable amount (see page 23) 16b

17 Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E 17

18 Farm income or (loss). Attach Schedule F 18

19 Unemployment compensation 19

20a Social security benefits 20a b Taxable amount (see page 25) 20b

21 21

22 Add the amounts in the far right column for lines 7 through 21. This is your total income  22

IRA deduction (see page 27) 24

23

Archer MSA deduction. Attach Form 8853

26

25

One-half of self-employment tax. Attach Schedule SE

27

Self-employed health insurance deduction (see page 30)

26

28

27

Self-employed SEP, SIMPLE, and qualified plans

29

28

Penalty on early withdrawal of savings

30

29

Alimony paid b Recipient’s SSN 

Add lines 23 through 33a 34

30

Subtract line 34 from line 22. This is your adjusted gross income 

31

Adjusted

Gross

Income

35

If you did not

get a W-2,

see page 21. Form

Married filing separately. Enter spouse’s SSN above

and full name here. 

Cat. No. 11320B





Label

Form 1040 (2002)

IRS Use Only—Do not write or staple in this space.

Head of household (with qualifying person). (See page 19.) If

the qualifying person is a child but not your dependent, enter

this child’s name here. 

Other income. List type and amount (see page 27)

Moving expenses. Attach Form 3903

24

25

For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see page 72.

No. of boxes

checked on

6a and 6b

No. of children

on 6c who:

Dependents on 6c

not entered above

Add numbers

on lines

above 

● lived with you

● did not live with

you due to divorce

or separation

(see page 20)

32 32

Student loan interest deduction (see page 28)

31

33a

  Important!

Yes No

Note. Checking “Yes” will not change your tax or reduce your refund.

Do you, or your spouse if filing a joint return, want $3 to go to this fund? 

You must enter

your SSN(s) above.

No Yes

You Spouse

(See page 19.)

(99)

Tuition and fees deduction (see page XX)

34

33a

2002

4

5

35

Educator expenses (see page xx) 23

Robert Butler 000 00 4818

Ann Butler 000 00 6818

10 Salem Ave.

Omaha, NE 68108

X X
50

Draft as of

5/02/2002

Schedules A&B (Form 1040) 2002 OMB No. 1545-0074 Page 2

Name(s) shown on Form 1040. Do not enter name and social security number if shown on other side. Your social security number

Attachment Schedule B—Interest and Ordinary Dividends Sequence No. 08

Part I

Interest

(See page B-1

and the

instructions for

Form 1040,

line 8a.)

Amount List name of payer. If any interest is from a seller-financed mortgage and the

buyer used the property as a personal residence, see page B-1 and list this

interest first. Also, show that buyer’s social security number and address 

1

Note. If you

received a Form

1099-INT, Form

1099-OID, or

substitute

statement from

a brokerage firm,

list the firm’s

name as the

payer and enter

the total interest

shown on that

form.

1

2 Add the amounts on line 1 2

3

Excludable interest on series EE and I U.S. savings bonds issued after 1989

from Form 8815, line 14. You must attach Form 8815

3

4 Subtract line 3 from line 2. Enter the result here and on Form 1040, line 8a  4

Part II

Ordinary

Dividends

Amount

(See page B-1

and the

instructions for

Form 1040,

line 9.)

5 List name of payer. Include only ordinary dividends. If you received any capital

gain distributions, see the instructions for Form 1040, line 13 

Note. If you

received a Form

1099-DIV or

substitute

statement from

a brokerage firm,

list the firm’s

name as the

payer and enter

the ordinary

dividends shown

on that form.

5

6 Add the amounts on line 5. Enter the total here and on Form 1040, line 9  6

For Paperwork Reduction Act Notice, see Form 1040 instructions. Schedule B (Form 1040) 2002

Note. If line 4 is over $400, you must complete Part III.

Note. If line 6 is over $400, you must complete Part III.

You must complete this part if you (a) had over $400 of taxable interest or ordinary dividends; (b) had a

Part III foreign account; or (c) received a distribution from, or were a grantor of, or a transferor to, a foreign trust.

Foreign

Accounts

and Trusts

Yes No

At any time during 2002, did you have an interest in or a signature or other authority over a financial

account in a foreign country, such as a bank account, securities account, or other financial

account? See page B-2 for exceptions and filing requirements for Form TD F 90-22.1

7a

b If “Yes,” enter the name of the foreign country  

(See

page B-2.) During 2002, did you receive a distribution from, or were you the grantor of, or transferor to, a

foreign trust? If “Yes,” you may have to file Form 3520. See page B-2

8

Robert Butler 000 00 4818
51

Draft as of

7/31/02

- 26 -

Form 1040—Lines 20a and 20b

Need more information or forms? See page 7.

Social Security Benefits Worksheet—Lines 20a and 20b Keep for Your Records

1. Enter the total amount from box 5 of all your Forms SSA-1099 and

RRB-1099

Add the amounts on Form 1040, lines 7, 8a, 9 through 14, 15b, 16b, 17 through 19, and 21.

Do not include amounts from box 5 of Forms SSA-1099 or RRB-1099

3.

Add lines 2, 3, and 4

4.

5.

Add the amounts on Form 1040, lines 23, 24, and 27 through 33a, and any amount you entered

on the dotted line next to line 34

Is the amount on line 6 less than the amount on line 5?

6.

Enter: $25,000 if single, head of household, qualifying widow(er), or married filing separately

and you lived apart from your spouse for all of 2002; $32,000 if married filing jointly; -0-

if married filing separately and you lived with your spouse at any time in 2002

7.

Is the amount on line 8 less than the amount on line 7?

8.

No. None of your social security benefits are taxable. You do not have to enter any

amounts on lines 20a or 20b of Form 1040. But if you are married filing

separately and you lived apart from your spouse for all of 2002, enter -0- on

line 20b. Be sure you entered “D” to the right of the word “benefits” on

line 20a.

Yes. Subtract line 8 from line 7

Enter one-half of line 12

9.

10.

If part of your benefits are taxable for 2002 and they include benefits paid in 2002 that were for an earlier

year, you may be able to reduce the taxable amount. See Pub. 915 for details.

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

Enter the amount, if any, from Form 1040, line 8b

11. 11.

Enter: $9,000 if single, head of household, qualifying widow(er), or married filing separately

and you lived apart from your spouse for all of 2002; $12,000 if married filing jointly; -0-

if married filing separately and you lived with your spouse at any time in 2002

12.

Subtract line 10 from line 9. If zero or less, enter -0-

12.

13.

Enter the smaller of line 9 or line 10

13.

14. Enter the smaller of line 2 or line 13 14.

15. Multiply line 11 by 85% (.85). If line 11 is zero, enter -0- 15.

16. Add lines 14 and 15 16.

17. Multiply line 1 by 85% (.85) 17.

18. Taxable social security benefits. Enter the smaller of line 16 or line 17

● Enter the amount from line 1 above on Form 1040, line 20a.

● Enter the amount from line 18 above on Form 1040, line 20b.

18.

Before you begin:  Complete Form 1040, lines 21, 23, 24, and 27 through 33a, if they apply

to you.

 Figure any amount to be entered on the dotted line next to line 34 (see

page 30).

 If you are married filing separately and you lived apart from your spouse

for all of 2002, enter “D” to the right of the word “benefits” on line 20a.

 Be sure you have read the Exception on page 25 to see if you can use this

worksheet instead of a publication to find out if any of your benefits are

taxable.

2. Enter one-half of line 1

STOP

No. None of your social security benefits are taxable.

Yes. Subtract line 6 from line 5

STOP
Record all answers on the tear-out Test Answer Sheet located in the front of the test

booklet.

52

Record all answers on the tear-out Test Answer Sheet located in the front of the test

booklet.

For questions C-11 and C-12, complete a Capital Loss Carryover Worksheet using the

completed Schedule D and information below.

Form 1040, Line 39, is $(2,400.00)

C-11 What is the Short Term Capital Loss Carryover to 2003, if any (Worksheet 

Line 8)?

a. 0

b. $600

c. $2,400

d. $2,920

e. $3,520

C-12 What is his Long Term Capital Loss Carryover to 2003, if any (Worksheet Line 13).

a. 0

b. $600

c. $1,160

d. $2,920

e. $3,520
53

Draft as of

5/07/2002

*28% rate gain or loss includes all “collectibles gains and losses” (as defined on page D-6 of the instructions) and up to 50% of

the eligible gain on qualified small business stock (see page D-4 of the instructions).

OMB No. 1545-0074 SCHEDULE D Capital Gains and Losses (Form 1040)  Attach to Form 1040.  See Instructions for Schedule D (Form 1040).

Department of the Treasury

Internal Revenue Service

Attachment

 Use Schedule D-1 to list additional transactions for lines 1 and 8. Sequence No. 12

Name(s) shown on Form 1040 Your social security number

Short-Term Capital Gains and Losses—Assets Held One Year or Less

(f) Gain or (loss)

Subtract (e) from (d)

(e) Cost or other basis

(see page D-5 of the

instructions)

(a) Description of property

(Example: 100 sh. XYZ Co.)

(d) Sales price

(see page D-5 of

the instructions)

(c) Date sold

(Mo., day, yr.)

1

Enter your short-term totals, if any, from

Schedule D-1, line 2

2

Total short-term sales price amounts.

Add lines 1 and 2 in column (d)

3

3

5

Short-term gain from Form 6252 and short-term gain or (loss) from Forms 4684,

6781, and 8824

5

6

6

Net short-term gain or (loss) from partnerships, S corporations, estates, and trusts

from Schedule(s) K-1

7

Short-term capital loss carryover. Enter the amount, if any, from line 8 of your

2001 Capital Loss Carryover Worksheet

Net short-term capital gain or (loss). Combine lines 1 through 6 in column (f).

Long-Term Capital Gains and Losses—Assets Held More Than One Year

8

Enter your long-term totals, if any, from

Schedule D-1, line 9

9

10 Total long-term sales price amounts.

Add lines 8 and 9 in column (d) 10

11

Gain from Form 4797, Part I; long-term gain from Forms 2439 and 6252; and

long-term gain or (loss) from Forms 4684, 6781, and 8824

11

12

12

13

Net long-term gain or (loss) from partnerships, S corporations, estates, and trusts

from Schedule(s) K-1

14

Capital gain distributions. See page D-1 of the instructions

15 15

14

16

Long-term capital loss carryover. Enter in both columns (f) and (g) the amount, if

any, from line 13 of your 2001 Capital Loss Carryover Worksheet ( )

Combine lines 8 through 14 in column (g)

Net long-term capital gain or (loss). Combine lines 8 through 14 in column (f)

Next: Go to Part III on the back.

16

For Paperwork Reduction Act Notice, see Form 1040 instructions. Schedule D (Form 1040) 2002 Cat. No. 11338H

( )

4

4

Part I

Part II

7

13

(b) Date

acquired

(Mo., day, yr.)

2

9

(99)

(f) Gain or (loss)

Subtract (e) from (d)

(a) Description of property

(Example: 100 sh. XYZ Co.)

(c) Date sold

(Mo., day, yr.)

(b) Date

acquired

(Mo., day, yr.)

(g) 28% rate gain or

(loss)

(see instr. below)

( )

* (e) Cost or other basis

(see page D-5 of the

instructions)

(d) Sales price

(see page D-5 of

the instructions)

2002

Adam Curry 000 00 6446

3520

(3520)

1160

(1160)
54

Draft as of

5/07/2002

Schedule D (Form 1040) 2002

Taxable Gain or Deductible Loss

Combine lines 7 and 16 and enter the result. If a loss, go to line 18. If a gain, enter the gain on

Form 1040, line 13, and complete Form 1040 through line 41

17

17

18 ( )

Part III

Page 2

18

Next:

If line 17 is a loss, enter here and on Form 1040, line 13, the smaller of (a) that loss or

(b) ($3,000) (or, if married filing separately, ($1,500)). Then complete Form 1040 through line 39

Part IV Tax Computation Using Maximum Capital Gains Rates

20

Enter your unrecaptured section 1250 gain,

if any, from line 17 of the worksheet on

page D-7 of the instructions

22

23

24

25

Subtract line 22 from line 21. If zero or less, enter -0-

26

27

28

30

31

34

35

36 Subtract line 35 from line 34

23

24

25

26

27

28

31

30

21

Enter your taxable income from Form 1040, line 41 20

● If both lines 16 and 17 are gains and Form 1040, line 41, is more than zero, complete

Part IV below.

Subtract line 23 from line 20. If zero or less, enter -0-

Enter the smaller of:

Enter the amount from line 24

Subtract line 27 from line 26. If zero or less, enter -0- and go to line 34

Enter the smaller of line 28 or line 29

Multiply line 30 by 8% (.08)

Enter the smaller of line 20 or line 23

Enter the amount from line 28 (if line 28 is blank, enter -0-)

19

33

34

35

36

37

● The amount on line 20 or

● $46,700 if married filing jointly or qualifying widow(er);

$27,950 if single;

$37,450 if head of household; or

$23,350 if married filing separately

37 Multiply line 36 by 20% (.20)

Schedule D (Form 1040) 2002

● Otherwise, skip the rest of Schedule D and complete Form 1040.

Next: ● If the loss on line 17 is more than the loss on line 18 or if Form 1040, line 39, is less

than zero, skip Part IV below and complete the Capital Loss Carryover Worksheet

on page D-6 of the instructions before completing the rest of Form 1040.

● Otherwise, skip Part IV below and complete the rest of Form 1040.

19

If line 15 or line 19 is more than zero, complete the worksheet on

page D-9 of the instructions to figure the amount to enter on lines

22, 29, and 40 below, and skip all other lines below. Otherwise,

go to line 20.

22

Enter the smaller of line 16 or line 17 of

Schedule D

If you are deducting investment interest

expense on Form 4952, enter the amount

from Form 4952, line 4e. Otherwise, enter -0-

21

Figure the tax on the amount on line 24. Use the Tax Table or Tax Rate Schedules, whichever applies



If line 26 is greater than line 24, go to line 27. Otherwise, skip lines

27 through 33 and go to line 34.

29

29

Enter your qualified 5-year gain, if any, from

line 7 of the worksheet on page D-8

32 Subtract line 30 from line 28 32

33 Multiply line 32 by 10% (.10)

38

39

40

Add lines 25, 31, 33, and 37

Figure the tax on the amount on line 20. Use the Tax Table or Tax Rate Schedules, whichever applies

Tax on all taxable income (including capital gains). Enter the smaller of line 38 or line 39 here

and on Form 1040, line 42

38

39

40

If the amounts on lines 23 and 28 are the same, skip lines 34 through 37 and go to line 38.

(4680)

3000
Draft as of

7/31/2002

8.

7.

Capital Loss Carryover Worksheet—Line 18 Keep for Your Records

Enter the amount from Form 1040, line 39. If a loss, enclose the amount in parentheses

Enter the loss from Schedule D, line 18, as a positive amount

Combine lines 1 and 2. If zero or less, enter -0-

Enter the smaller of line 2 or line 3

If line 7 of Schedule D is a loss, go to line 5; otherwise, enter -0- on line 5 and go to line 9.

Enter the loss from Schedule D, line 7, as a positive amount

Enter any gain from Schedule D, line 16

Add lines 4 and 6

Short-term capital loss carryover to 2003. Subtract line 7 from line 5. If zero or less, enter -0-

Enter the loss from Schedule D, line 16, as a positive amount

Enter any gain from Schedule D, line 7

Subtract line 5 from line 4. If zero or less, enter -0-

Add lines 10 and 11

Long-term capital loss carryover to 2003. Subtract line 12 from line 9. If zero or less, enter -0-

If line 16 of Schedule D is a loss, go to line 9; otherwise, skip lines 9 through 13.

Use this worksheet to figure your capital loss carryovers from 2002 to 2003 if Schedule D, line 18, is a loss and (a) that loss is a

smaller loss than the loss on Schedule D, line 17, or (b) Form 1040, line 39, is a loss. Otherwise, you do not have any carryovers.

1.

2.

3.

4.

5.

6.

7.

8.

9.

1.

2.

3.

4.

5.

6.

9.

10.

11.

12.

13.

12.

10.

11.

13.

55
Record all answers on the tear-out Test Answer Sheet located in the front of the test

booklet.

56

Record all answers on the tear-out Test Answer Sheet located in the front of the test

booklet.

For questions C-13 through C-15, complete a Schedule D, to include the Qualified 5-Year

Gain Worksheet, using information from the scenario below.

John Hemlock (SSN 000-00-5395) needs help completing his tax return. He is single 

and was born on September 4, 1941. His only income is from interest, dividends and the

sale of stock.

John’s Substitute Form 1099-DIV from Allied Investments shows:

Ordinary Dividends (Box 1): $6,230.00

Total capital gain distr. (Box 2a): $2,810.18

Qualified 5-year gain (Box 2c): $ 859.92

John’s Substitute Form 1099-B from Boston Brokerage has the following entries:

(Purchase data penciled in by taxpayer)

Quantity/Stock Date Sold Proceeds Purchase Date and Cost

100 sh. DEF Co. 3/16/2002 $1450.00 9/12/1999 $1800.00

100 sh. HJK Co. 5/15/2002 4000.00 6/10/2001 3200.00

300 sh. LMN Co. 6/22/2002 4120.00 1/20/1993 3000.00

Assume his taxable income, including these items, is $9,905 on Form 1040, Line 41.

C-13 What is on Schedule D, Line 17?

a. 0

b. $2,810

c. $3,580

d. $4,380

e. $5,000

C-14 What is on Schedule D, Line 29?

a. 0

b. $860

c. $1,120

d. $1,980

e. $3,580

C-15 What is on Schedule D, Line 40?

a. 0

b. $160

c. $967

d. $1,189

e. $3,580
57

Draft as of

5/07/2002

*28% rate gain or loss includes all “collectibles gains and losses” (as defined on page D-6 of the instructions) and up to 50% of

the eligible gain on qualified small business stock (see page D-4 of the instructions).

OMB No. 1545-0074 SCHEDULE D Capital Gains and Losses (Form 1040)  Attach to Form 1040.  See Instructions for Schedule D (Form 1040).

Department of the Treasury

Internal Revenue Service

Attachment

 Use Schedule D-1 to list additional transactions for lines 1 and 8. Sequence No. 12

Name(s) shown on Form 1040 Your social security number

Short-Term Capital Gains and Losses—Assets Held One Year or Less

(f) Gain or (loss)

Subtract (e) from (d)

(e) Cost or other basis

(see page D-5 of the

instructions)

(a) Description of property

(Example: 100 sh. XYZ Co.)

(d) Sales price

(see page D-5 of

the instructions)

(c) Date sold

(Mo., day, yr.)

1

Enter your short-term totals, if any, from

Schedule D-1, line 2

2

Total short-term sales price amounts.

Add lines 1 and 2 in column (d)

3

3

5

Short-term gain from Form 6252 and short-term gain or (loss) from Forms 4684,

6781, and 8824

5

6

6

Net short-term gain or (loss) from partnerships, S corporations, estates, and trusts

from Schedule(s) K-1

7

Short-term capital loss carryover. Enter the amount, if any, from line 8 of your

2001 Capital Loss Carryover Worksheet

Net short-term capital gain or (loss). Combine lines 1 through 6 in column (f).

Long-Term Capital Gains and Losses—Assets Held More Than One Year

8

Enter your long-term totals, if any, from

Schedule D-1, line 9

9

10 Total long-term sales price amounts.

Add lines 8 and 9 in column (d) 10

11

Gain from Form 4797, Part I; long-term gain from Forms 2439 and 6252; and

long-term gain or (loss) from Forms 4684, 6781, and 8824

11

12

12

13

Net long-term gain or (loss) from partnerships, S corporations, estates, and trusts

from Schedule(s) K-1

14

Capital gain distributions. See page D-1 of the instructions

15 15

14

16

Long-term capital loss carryover. Enter in both columns (f) and (g) the amount, if

any, from line 13 of your 2001 Capital Loss Carryover Worksheet ( )

Combine lines 8 through 14 in column (g)

Net long-term capital gain or (loss). Combine lines 8 through 14 in column (f)

Next: Go to Part III on the back.

16

For Paperwork Reduction Act Notice, see Form 1040 instructions. Schedule D (Form 1040) 2002 Cat. No. 11338H

( )

4

4

Part I

Part II

7

13

(b) Date

acquired

(Mo., day, yr.)

2

9

(99)

(f) Gain or (loss)

Subtract (e) from (d)

(a) Description of property

(Example: 100 sh. XYZ Co.)

(c) Date sold

(Mo., day, yr.)

(b) Date

acquired

(Mo., day, yr.)

(g) 28% rate gain or

(loss)

(see instr. below)

( )

* (e) Cost or other basis

(see page D-5 of the

instructions)

(d) Sales price

(see page D-5 of

the instructions)

2002

John Hemlock 000 00 5395
58

Draft as of

5/07/2002

Schedule D (Form 1040) 2002

Taxable Gain or Deductible Loss

Combine lines 7 and 16 and enter the result. If a loss, go to line 18. If a gain, enter the gain on

Form 1040, line 13, and complete Form 1040 through line 41

17

17

18 ( )

Part III

Page 2

18

Next:

If line 17 is a loss, enter here and on Form 1040, line 13, the smaller of (a) that loss or

(b) ($3,000) (or, if married filing separately, ($1,500)). Then complete Form 1040 through line 39

Part IV Tax Computation Using Maximum Capital Gains Rates

20

Enter your unrecaptured section 1250 gain,

if any, from line 17 of the worksheet on

page D-7 of the instructions

22

23

24

25

Subtract line 22 from line 21. If zero or less, enter -0-

26

27

28

30

31

34

35

36 Subtract line 35 from line 34

23

24

25

26

27

28

31

30

21

Enter your taxable income from Form 1040, line 41 20

● If both lines 16 and 17 are gains and Form 1040, line 41, is more than zero, complete

Part IV below.

Subtract line 23 from line 20. If zero or less, enter -0-

Enter the smaller of:

Enter the amount from line 24

Subtract line 27 from line 26. If zero or less, enter -0- and go to line 34

Enter the smaller of line 28 or line 29

Multiply line 30 by 8% (.08)

Enter the smaller of line 20 or line 23

Enter the amount from line 28 (if line 28 is blank, enter -0-)

19

33

34

35

36

37

● The amount on line 20 or

● $46,700 if married filing jointly or qualifying widow(er);

$27,950 if single;

$37,450 if head of household; or

$23,350 if married filing separately

37 Multiply line 36 by 20% (.20)

Schedule D (Form 1040) 2002

● Otherwise, skip the rest of Schedule D and complete Form 1040.

Next: ● If the loss on line 17 is more than the loss on line 18 or if Form 1040, line 39, is less

than zero, skip Part IV below and complete the Capital Loss Carryover Worksheet

on page D-6 of the instructions before completing the rest of Form 1040.

● Otherwise, skip Part IV below and complete the rest of Form 1040.

19

If line 15 or line 19 is more than zero, complete the worksheet on

page D-9 of the instructions to figure the amount to enter on lines

22, 29, and 40 below, and skip all other lines below. Otherwise,

go to line 20.

22

Enter the smaller of line 16 or line 17 of

Schedule D

If you are deducting investment interest

expense on Form 4952, enter the amount

from Form 4952, line 4e. Otherwise, enter -0-

21

Figure the tax on the amount on line 24. Use the Tax Table or Tax Rate Schedules, whichever applies



If line 26 is greater than line 24, go to line 27. Otherwise, skip lines

27 through 33 and go to line 34.

29

29

Enter your qualified 5-year gain, if any, from

line 7 of the worksheet on page D-8

32 Subtract line 30 from line 28 32

33 Multiply line 32 by 10% (.10)

38

39

40

Add lines 25, 31, 33, and 37

Figure the tax on the amount on line 20. Use the Tax Table or Tax Rate Schedules, whichever applies

Tax on all taxable income (including capital gains). Enter the smaller of line 38 or line 39 here

and on Form 1040, line 42

38

39

40

If the amounts on lines 23 and 28 are the same, skip lines 34 through 37 and go to line 38.
59

Draft as of

07/05/2002

D-8

John and Carol Maple have total qualified

5-year gain of $3,000 figured on the Qualified 5-Year Gain Worksheet as follows.

They enter $2,300 from items 2 and 5 on

line 1. To complete line 2, the Maples first

determine that the amount on their Form

4797, line 7, is $100, consisting of the

$5,300 gain from item 6 and the $5,200 loss

from item 7. Because Form 4797, line 7, is

more than zero, they include the $5,300 gain

from item 6 and the $400 gain from item 7,

or $5,700, on line 2. The Maples enter zero

on lines 3 and 4. They enter $900 from item

4 and $200 from item 7, or $1,100, on line

5. The Maples add lines 1 through 5 of the

worksheet and enter $9,100 on line 6. On

line 7, they include the $1,800 gain from

item 5 because it is 28% rate gain from the

sale of a collectible and $4,300 from item

6 because it is included on line 6 of the

Unrecaptured Section 1250 Gain Worksheet. (The Maples entered $4,300 on line

1 of the Unrecaptured Section 1250 Gain

Worksheet, zero on line 2, and $4,300 on

lines 3 and 6.) The Maples subtract the

$6,100 on line 7 of the worksheet from the

$9,100 on line 6. They enter the result,

$3,000 on line 8 of the worksheet and on

Schedule D, line 29.

Qualified 5-Year Gain Worksheet—Line 29 Keep for Your Records

Enter the total of all gains that you reported on line 8, column (f), of Schedules D and D-1 from

dispositions of property held more than 5 years. Do not reduce these gains by any losses

Enter the total of all gains from dispositions of property held more than 5 years from Form 4797, Part

I, but only if Form 4797, line 7, is more than zero. Do not reduce these gains by any losses

Enter the total of all capital gains from dispositions of property held more than 5 years from Form

6252; Form 6781, Part II; and Form 8824. Do not reduce these gains by any losses

Add lines 1 through 5

2.

4.

5.

6.

1.

2.

4.

5.

6.

Enter the total of any qualified 5-year gain reported to you on:

1.

Enter the part, if any, of the gain on line 6 that is:

● Attributable to 28% rate gain or

● Included on line 6, 10, 11, or 12 of the Unrecaptured

Section 1250 Gain Worksheet on page D-7.

7.

8. Qualified 5-year gain. Subtract line 7 from line 6. Enter the result here and on Schedule D, line 29

7.

8.



● Form 1099-DIV, box 2c;

● Form 2439, box 1c; and

● Schedule K-1 from a partnership, S corporation, estate, or trust (do not

include gains from section 1231 property; take them into account on

line 2 above, but only if Form 4797, line 7, is more than zero). 

Enter the total of all gains from dispositions of property held more than 5 years from Form 4684, line

4, but only if Form 4684, line 15, is more than zero. Do not reduce these gains by any losses

3.

3.