Archive for Wednesday, March 29, 2000

Several tax laws changed for 1999

March 29, 2000

A number of tax law changes may apply to you as you file your tax return this year. These changes may mean the difference between getting a tax refund and paying more taxes.

See the instructions in your tax package for more information on these 1999 modifications.

If you have a child who was under age 17 at the end of 1999, you may be able to claim either or both the Child Tax Credit and the Additional Child Tax Credit. The total of these credits can be as much as $500 for each qualifying child. If you have three or more qualifying children and you are not able to claim the full $500 Child Tax Credit for each child, you may be able to claim the Additional Child Tax Credit. The Additional Child Tax Credit is refundable it may give you a refund even if you do not owe any tax. The earned income tax credit (EITC) could be as much as $3,816 if you have more than one qualifying child; up to $2,312 if you have one qualifying child; and as much as $347 even if you don't have children.

The amount you can earn and still be eligible for the credit in 1999 is $30,580 if you have more than one child; $26,928 if you have one qualifying child; and $10,200 even if you don't have children. If you aren't eligible for the EITC, but claim it anyway, you could be prohibited from claiming the credit for up to 10 years once discovered.

If you claimed an education credit on your 1998 tax return and, in 1999, you, your spouse if filing jointly, or your dependent received a refund of qualified tuition and related expenses, or tax-free education assistance, you may have to repay part of the credit on your return this year. For more details on the recapture of education credits, order a free copy of Form 8863, Education Credits, by calling the IRS at (800) 829-3676.

If you paid interest on a qualified student loan this year, you may be able to deduct up to $1,500 of the interest on your return, even if you don't itemize deductions on Schedule A. And in the year 2000, you may be able to deduct up to $2,000 of the interest you pay on a qualified student loan.

If you converted part or all of an IRA to a Roth IRA in 1998, and you chose to report the taxable amount over four years, you must report the amount that is taxable in 1999 on your return.

You may be able to take an IRA deduction if you were covered by a retirement plan and your 1999 modified adjusted gross income was less than $41,000 and you filed as single, head of household, or married (filing separately) and you lived apart from your spouse for all of 1999; or if your 1999 modified adjusted gross income was less than $61,000 and you filed as married (filing jointly) or qualifying widow(er). Note: In the tax year 2000, these dollar amounts will increase by $1,000.

This year, if your only capital gains are capital gain distributions from mutual funds, you will not have to file Schedule D.

Check the box on line 13 of Form 1040 and use the worksheet in the instructions to figure your tax. If you are self-employed, you may be able to deduct up to 60 percent of your health insurance. Review the instructions in the tax package on self-employed health insurance deduction.

The standard mileage rate for business use of a vehicle prior to April 1, 1999, was 32 cents a mile. The rate for business use of a vehicle from April 1, 1999, through December 31, 1999, is 31 cents a mile. The rate returned to 32 cents a mile on January 1, 2000.

This filing season, most 1040 tax packages will contain an envelope with two labels one if you are requesting a refund, and one if you are not requesting a refund. The labels will enable the IRS to more efficiently sort the refund returns from the remittance returns. These labels will contain the address of the Internal Revenue Service Center and separate Zip +4 Zip Codes and PostNet barcodes. If you need to hand-write the address on your tax return envelope, the U.S. Postal Service will imprint the proper PostNet barcode on the face of the envelope. Barcodes facilitate the sorting of the tax returns.

This year, the IRS has partnered with the National Center for Missing and Exploited Children (NCMEC) to dramatically expand the distribution of photos of lost, abducted and runaway children.

Pictures of missing children appear in 1999 IRS tax form instructions and taxpayer information publications on pages that would otherwise be blank. The photos are provided by NCMEC and are be accompanied by information about the children and the NCMEC's 24-hour toll-free hotline number, (800) 843-5678.

For more details on tax law changes, download a copy of Publication 553, Highlights of 1999 Tax Changes, from www.irs.gov or order a free copy by calling the IRS at (800) 829-3676.

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