There are a number of tax law changes that may apply to you when
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 1-800-829-3676.
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% 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 will appear in
1999 IRS tax form instructions and taxpayer information publications on pages
that would otherwise be blank. The photos will be provided by NCMEC and will be
accompanied by information about the children and the NCMEC's 24-hour toll-free
hotline number, 1-800-843-5678. You can help bring these children home by
looking at the photographs and calling local authorities or NCMEC when you see
one of these children.
For further details on tax law changes, download a copy of Publication
553, Highlights of 1999 Tax Changes.
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