Year End Gives Taxpayers Something To Celebrate, CCH Outlines Tax Law Changes That Will Take Effect On January 1

Standard Deductions – in 2000, the standard deduction amounts rise to: $7,350 (marrieds filing jointly and surviving spouse), $3,675 (marrieds filing separately) $4,400 (single) and $6,450 (head of household). The standard deduction for dependents claimed on another’s return remains at $700.

Exemptions – Each personal exemption will be worth $2,800 on 2000 returns, up from $2,750 on 1999 returns.

Social Security Adjustments for Inflation – The maximum amount of wages subject to Social Security old age, survivors’ and disability withholding increases from $72,600 to $76,200.

Social Security Income Limits – The income a Social Security recipient between age 65 and age 69 can earn before seeing a reduction in benefits rises from $15,500 to $17,000. Those under age 65 can earn up to $10,080 before seeing a reduction in their benefits.

Mileage Bobs Back Up – The standard per-mile rate for business use of an automobile will be back at 32.5 cents per mile, after a nine-month stint at 31 cents per mile. Other rates remain unchanged – medical use at 14 cents per mile and charitable use at 10 cents per mile.

Deductible Student Loan Interest Up – The amount of qualified interest on student loans that can be deducted on 2000 returns will be $2,000, up from the $1,500 maximum on 1999 returns.

IRA Phaseouts – In 2000, the ability for those covered by a qualified plan to make a deductible contribution to an IRA will begin to phase out at $32,000 in adjusted gross income and end at $42,000 for single filers. For marrieds filing jointly, the phaseout range is $52,000 to $62,000.

401(k) Contributions – The maximum that can be contributed to a 401(k) plan in 2000 rises to $10,500 from $10,000 in 1999.

Expense Election – The amount that can be "expensed" rather than depreciated under Section 179 of the Internal Revenue Code rises to $20,000 in 2000.

Foreign Earned Income Exclusion – The exclusion on foreign earned income rises to $76,000 next year.

Estate Tax – The unified credit equivalent for 2000 will be $675,000.

More Expensive ‘Safe Harbor’ – Taxpayers with adjusted gross incomes of $150,000 or more who make estimated tax payments for tax year 2000 will have to fork over at least 108.6 percent of their 1999 taxes in order to have a ‘safe harbor’ from IRS penalties in the event that their estimated taxes are less than what they actually owe for 2000. The safe harbor figure had been 106 percent for this group prior to the passage of legislation extending expiring tax provisions. For taxpayers with adjusted gross incomes less than $150,000, the safe harbor figure remains 100 percent of prior year’s taxes.

State Tax Deadbeats May Lose Federal Refund – The IRS will be empowered to offset unpaid state income taxes against federal refunds, but only if the debt to the state has been "reduced to judgement." Also, unlike a similar program for collecting past-due child support, the debtor must still live in the same state to which the money is owed.

A Kinder, Gentler, Saner IRS? – Under provisions of the IRS Restructuring and Reform Act, when the IRS seizes your IRA or 401(k) to pay a tax bill, it will no longer impose an additional "early withdrawal" penalty on you. The Service will also stop the practice of levying on a taxpayer’s wages even after it admits that a tax debt is uncollectible, or when an installment agreement is pending or in effect.

About CCH INCORPORATED

CCH INCORPORATED, headquartered in Riverwoods, Ill., was founded in 1913 and has served four generations of business professionals and their clients. The company produces more than 700 electronic and print products for the tax, legal, securities, human resources, health care and small business markets. CCH is a wholly owned subsidiary of Wolters Kluwer U.S. The CCH web site can be accessed at www.cch.com. The CCH Federal and State Tax web site can be accessed at tax.cchgroup.com.

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