2000 tax season brings money saving changes
Death and taxes may be life’s only certainties but that doesn’t mean the latter is exempt from change.
Most of the changes for the 1999 filing season will save taxpayers money, according to Internal Revenue Service spokesman Larry Wright.
“The good news is that the tax laws have stayed very much the same,” he said. “And most of those changes are beneficial to the taxpayers.”
A $100 increase in tax credit may be the most significant change impacting low- and middle-income taxpayers this year.
The child tax credit, a component of the 1997 Taxpayer Relief Act, has increased from $400 in 1998 per child to $500 for 1999. To be eligible for the credit, the child, stepchild or foster child must be under the age of 17 as of Dec. 31, 1999. The credit begins to phase out after single-family income reaches $75,000 or $110,000 for married income status.
Certified Public Accountant Jack Marcarelli said taking away credits in relation to income is a trend he’s seen increase during the 15 years he’s been in practice.
“Once the income gets to a certain level, they’re not able to use that credit,” he said. “And it’s becoming easier all the time to get to that middle-income level.”
Marcarelli said education tax credits are also a worthwhile pursuit for people looking for breaks.
The HOPE tax credit allows up to a $1,500 college tuition credit per student in the first two years of their college education. A lifetime learning credit is also available for graduate students or students enrolled in a work skills improvement program.
Deductions for health insurance premiums have increased from 45 to 60 percent in 1999.
The business sector is also set to experience a change in tax laws this year.
“Having a home office is easier to claim this year,” Wright said. “Under the old rules, people had to conduct business in a home office and now that definition has been expanded and that makes it easier to claim a home office.”
Other changes in store for businesses include:
– A drop in the vehicle mileage rate for business travel from 32.5 cents before April 30, 1999 to 31 cents.
– An increase in business equipment write off from $18,500 to $19,000 in 1999.
“It’s not a high increase but every penny helps when you’re establishing a business,” Wright said.
Marcarelli, who is licensed to practice in both Nevada and California, said there is another way to save on taxes – move to Nevada.
“Property taxes, sales tax, everything you look at is going to be cheaper in Nevada,” he said. “With the exception of health care.”
While crossing the state line can offer some tax breaks, it also provides some tax-filing challenges for the inexperienced. Claiming to be a resident in a state other than where you live can start a troublesome relationship with the IRS, Marcarelli said. For that reason, he advises to hire a tax professional when in doubt.
“I have become an expert in telling you if you’re a California or a Nevada resident,” he said. “It’s not simply getting a Nevada driver’s license.”
For more tax-saving tips check the Internal Revenue Service Web site at:
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