As you prepare for your upcoming tax appointment, keep in mind that 2002 tax returns offer new and increased "above-the-line" deductions. "Above-the-line" deductions are ones that you can deduct from your gross income. This allows you to claim the deduction, even if you take the standard deduction instead of itemizing your deductions. "Above-the-line" deductions will even help itemizers, since gross income is used to determine several Schedule A limitations. A reduced gross income will generally allow a larger portion of the itemized deductions to actually be deducted.

• Teacher's Expenses (New for 2002) - Educators who work in a school (grades K through 12) for at least 900 hours during a school year are allowed a deduction of up to $250 for their qualified expenses. Qualified expenses generally include books, supplies, computer equipment and supplemental classroom materials. Qualified educators include teachers, instructors, counselors, principals and aides.
  
  
• Education Expenses (New for 2002) - There is an "above-the-line" $3,000 deduction for qualified higher education tuition and allowable related fees. This deduction introduces complications, since taxpayers will be required to choose between the new deduction and the Hope of Lifetime learning credits. The credits phase out at lower income levels than the deduction, making it possible for some taxpayers that cannot qualify for the credits, to qualify for the deduction. The deduction is only allowed for joint filing taxpayers with gross incomes of less than $130,000 and $65,000 for unmarried filing status.
  
  
• Higher Education Loan Interest - Beginning in 2002, the original 60-month limit for this deduction has been abolished and the income phase out limitations have been increased, making this potential $2,500 deduction available to more taxpayers. The income (AGI) phase out range for the unmarried filing status has been increased to $50,000 - $65,000 (was previously $40,000 - $55,000). In an effort to minimize the marriage penalty, joint filers have an even more substantial increase to $100,000 - $130,000 (was previously $60,000 - $75,000).
  
  
• Qualified Clean-Fuel Vehicle - Up to $2,000 can be deducted for a portion of the cost of any qualified clean-fuel vehicle in the year the vehicle was first placed in service. Business use is not a requirement. Therefore, even a vehicle used for personal purposes will qualify. Hybrid vehicles, those powered by both gasoline internal combustion engine and rechargeable electric motor, also qualify. A manufacturer's certification is required, and in the case of a foreign manufacturer, IRS certification is required. Clean fuel includes natural gas, liquefied petroleum gas, hydrogen, electricity or any other fuel at least 8.5% of which is one or more of the following: methanol, ethanol, any other alcohol or ether.