Tax Tips From Michelle Biess, CPA (Tax Tip Archive)
January 1, 1999
Although no major new tax legislation was passed in 1999, this year some additional credits and deductions from the previous tax legislation go into effect. Significant aspects of the tax provisions effective for 1999 are provided here for your information.
The tax credit for each dependent child under 17 has been increased to $500 in 1999 for married couples with income under $110,000 and single parents with income under $75,000. This credit phases out above these income limits.
The HOPE Scholarship Credit allows taxpayers to claim a maximum credit of $1,500 for expenses paid for the first two years of college. The Lifetime Learning Credit allows taxpayers to claim a maximum credit of $1,000 for tuition and fees for post-secondary education expenses paid after June 30, 1998. Both credits cannot be used for the same person and they phase out above $100,000 for joint filers and $50,000 for single taxpayers.
Up to $1,500 in student loan interest is deductible on 1999 returns for loans within the first 60 months of repayment, up from $1,000 in 1998. This deduction is also phased out for joint taxpayers with income over $75,000 and single taxpayers with income over $55,000.
The standard mileage rate for business travel was 32.5 cents per mile from January 1 to March 31 and 31 cents per mile from April 1 to December 31. The rate for medical mileage remains at 10 cents per mile and charitable mileage remains at 14 cents per mile. For the upcoming year, the business mileage rate is again 32.5 cents per mile.
Early withdrawals from an IRA used to pay higher education expenses can be made without the 10% penalty. In addition, withdrawals of up to $10,000 are permitted for qualified first-time home buyers. The withdrawal in each case would still be subject to regular income tax.
For 1999, self-employed individuals may deduct 60% of the amount paid for health insurance, up from 45% in 1998. The current law does not have provide for any further increase of this percentage.
Once again, my office offers a full range of tax services including free electronic filing of Federal income tax returns for 1999. Direct deposit of tax refunds is available for taxpayers filing either electronically or with paper returns.
Sincerely,
Michelle M. Biess, CPA