The following information is a brief overview of the tax law changes that are effective in 2000. Refer to Publication 553, Highlights of 2000 Tax Changes for detailed information.

1. For tax years after 1999, a child is your eligible foster child for the earned income credit if all the following apply:

1. The child is your brother, sister, stepbrother, or stepsister (or descendent of your brother, sister, stepbrother, or stepsister) or has been placed with you by an authorized placement agency.
2. You cared for that child as you would your own child.
3. The child lived with you for the whole year, except for temporary absences."

2. For 2000 you may be able to deduct up to $2,000 for qualified student loan interest. You may only deduct interest that is paid during the first sixty months that interest payments are required. The qualified education loan must be for you, your spouse, or a dependent. For more information on these and other tax law changes, refer to Publication 553, Highlights of 2000 Tax Changes.

3. The optional mileage rate for operating your car for business is 32½ cents per mile for all business miles driven in 2000 until April 1. Beginning April 1, it decreased to 31 cents per mile.

4. The unified estate and gift tax exclusion is gradually increased from 1999 to 2006, from $650,000 to $1 million. The exclusion amount for both 2000 and 2001 is $675,000.

5. If you are a minister, a member of a religious order not under a vow of poverty, or a Christian Science practitioner who previously elected exemption from social security coverage, you now have a limited period of time to revoke that exemption. You must file Form 2031 by April 15, 2002, or by the extended due date if you get an extension of time to file your 2001 return.

6. The option to use 5 year averaging for figuring the tax on a lump-sum distribution from a qualified retirement plan is repealed for tax years beginning after 1999.

7. After 1999 there are additional limits on when you can reconvert a traditional IRA to a Roth IRA after a previous conversion and re-characterization. For more information, see Publication 590.

For more information on these and other tax law changes, see Publication 553, Highlights of 2000 Tax Changes.

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