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Leslie Bonacum
847-267-7153
mediahelp@cch.com
Neil Allen
847-267-2179
neil.allen@wolterskluwer.com

New Year Rings In Tax Changes - More Credit For Kids, Less For Car Expenses

(RIVERWOODS, ILL., December 24, 1998) -- A number of federal tax changes will become effective on the stroke of midnight when 1998 gives way to 1999, according to CCH INCORPORATED, a leading provider of tax and business law information. Here are the major changes to expect for 1999:

Expiring on December 31, 1998

Credit Relief Expires ¾ A special provision allowed taxpayers to deduct nonrefundable, personal credits from their regular tax for the calculation of alternative, minimum tax on their 1998 returns. These credits include the dependent care credit, child tax credit, credit for the elderly and disabled, adoption credit, Hope and lifetime learning credits, D.C. homebuyers credit and credit for interest on certain mortgages. Unless Congress acts for the 1999 tax year, these credits can only be taken against the amount by which regular tax exceeds alternative minimum tax.

Effective January 1, 1999

Higher Child Credit ¾ The child tax credit increases from $400 per child to $500.

Home Office Deduction ¾ Taxpayers with offices set up at home to take care of the administrative or management end of businesses, in which their principal earnings take place outside the home, may have an opportunity to take a home office deduction. You need to ensure, however, that you don’t lose more on being denied a principal residence home sale gain exclusion than is gained by the home office deduction.

Standard Deductions ¾ In 1999, standard deduction amounts rise to: $7,200 (marrieds filing jointly and surviving spouse), $3,600 (married filing separately), $4,300 (single) and $6,350 (head of household). The standard deduction for dependents will be $700 for 1999.

Exemptions ¾ Personal exemptions are set for $2,750 next year.

Social Security Adjustments for Inflation ¾ The maximum amount of wages subject to Social Security old-age, survivor’s and disability withholding increases as well, from $68,400 for 1998 to $72,600 for 1999.

Social Security Income Limits ¾ The income a Social Security recipient between 65 years-of-age and 69 years-of-age can earn before seeing a reduction in his/her Social Security benefits rises to $15,500.

Mileage Deflation ¾ The standard, per-mile deduction for business-related auto expenses will fall from 32.5 cents to 31 cents per mile. This is the first time the mileage rate has dropped. (Effective 4/1/99)

IRA Phaseouts ¾ In 1999, phaseouts for deductible IRA contributions by taxpayers covered by a qualified plan begins at $31,000 and ends at $41,000 for single filers. For marrieds filing jointly, the phaseout begins at $51,000 and ends at $61,000.

Health Insurance ¾ Self-employed individuals may deduct 60 percent of their health insurance costs in the 1999 tax year.

Education Interest ¾ The deductible amount of education loan interest expense will be $1,500 in 1999.

Expenses ¾ Section 179 expense amounts increase for 1999 to $19,000.

More Informative Notices ¾ Any notice of deficiency mailed by the IRS must specify the deadlines by which you must file a petition in Tax Court to contest the deficiency. A host of other IRS reforms became effective at various points during 1998, and some will become effective at the beginning of 2000.

No Hardship Rollovers ¾ As a result of a "technical correction" in 1998 legislation, you will no longer be able to take a "hardship" distribution from your company’s retirement plan and roll it over into an Individual Retirement Account.

Foreign Earned Income Exclusion ¾ The exclusion on foreign income rises to $74,000 next year.

Estate Tax ¾ The unified credit equivalent for 1999 will be $650,000.

About CCH INCORPORATED

CCH INCORPORATED, founded in 1913, has served four generations of business professionals and their clients. The company produces approximately 700 print and electronic products for 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.

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