Important Changes for 2000

The following items highlight a number of administrative and tax law changes for 2000. They are discussed in more detail throughout the publication. More information on these and other changes can be found in Publication 553, Highlights of 2000 Tax Changes.

Depreciation limits on business cars. The total section 179 deduction and depreciation you can take on a car you use in your business and first place in service in 2000 is $3,060. Special rules apply to certain clean-fuel vehicles. See chapter 8.

Earned income credit. The maximum earned income credit has been increased for 2000. To claim the credit, you must have earned income (including net earnings from self-employment) and modified adjusted gross income of less than $31,152 and meet certain other requirements. For more information, including what counts as earned income, see Publication 596, Earned Income Credit (EIC).

Farm income averaging. You may be able to use a negative taxable income amount for a base year when figuring your tax on Schedule J (Form 1040). See chapter 4.

Paid preparer authorization. Beginning with your return for 2000, you can check a box and authorize the IRS to discuss your tax return with the paid preparer who signed it. If you check the "Yes" box in the signature area of your return, the IRS can call your paid preparer to answer any questions that may arise during the processing of your return. Also, you are authorizing your paid preparer to perform certain actions. See your income tax package for details.

Section 179 deduction. For 2000, the total cost you can elect to deduct under section 179 of the Internal Revenue Code is increased to $20,000. See chapter 8.

Self-employed health insurance deduction. The part of your self-employed health insurance premiums you can deduct as an adjustment to income is 60% for 2000. See chapter 5.

Standard mileage rate. The standard mileage rate for the cost of operating your car, van, pickup, or panel truck in 2000 is 32 1/2 cents a mile for all business miles. See chapter 5.

Tax rates and maximum net earnings for self-employment tax. The maximum net self-employment earnings subject to the social security part (12.4%) of the self-employment tax increased to $76,200 for 2000. There is no maximum limit on earnings subject to the Medicare part (2.9%). See chapter 15.

Marginal production of oil and gas. The suspension of the taxable income limit on percentage depletion from the marginal production of oil and natural gas that was scheduled to expire for tax years beginning after 1999 has been extended to tax years beginning before 2002. For more information on marginal production, see section 613A(c) of the Internal Revenue Code.

Photographs of missing children. The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843- 5678) if you recognize a child.

First | Next

Publication Index | IRS-Forms Main | Home