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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 dont 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, survivors 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
companys 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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