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 s of the date of publication,
Congress and the president have not reached agreement on significant tax legislation in
1999. However, several tax provisions enacted at the end of 1998 as part of the
omnibus spending bill (H.R. 4328) that funded much of the federal government through
fiscal 1999 will affect taxpayers in tax year 1999 and beyond. The information that
follows is designed to help you think about tax and financial planning for this year and
next year, and for the longer term. Among these items, you will find tax-saving moves for
yourself and your family for now and for the future.
In this section, we explain:
1999 RULES TO KNOW
ABOUT
- Self-Employed Health Insurance Deduction Is Up. For 1999, a
self-employed person can deduct 60 percent of the amount he or she paid for health
insurance premiums. The deductible percentage grows in later years, as shown in Table 1-1.
TABLE 1-1
Health Insurance Premiums |
| For taxable years
beginning in |
Deductible
Percentage |
| 1999 - 2001 |
60% |
| 2002 |
70% |
| 2003 - thereafter |
100% |
- Taxpayer-Friendly Rule on Contributions of Appreciated Stock Has Expired.
For a number of years, taxpayers have been able to deduct an amount equal to the fair
market value of "qualified appreciated stock" contributed to a private
foundation. This deduction had expired on June 30, 1998. The provision reinstates and
extends permanently the fair-market-value deduction for qualified appreciated stock
contributed to a private foundation.
- The Child Tax Credit Becomes Fully Effective. The tax credit available
for each dependent child (including stepchildren and eligible foster children) who is
under the age of 17 at the end of the taxable year is increased from $400 to $500 in 1999.
The child credit generally is available only to the extent of a taxpayer’s regular
income tax liability. However, for a taxpayer with three or more children, this limitation
is increased by the excess of Social Security taxes paid over the sum of other
nonrefundable credits and any earned income tax credit allowed to the taxpayer.
The child credit is reduced and eventually eliminated as family income increases from
$110,000 to $120,000. Taxpayers filing joint returns will lose $50 of the credit for every
$1,000 (or part thereof) of adjusted gross income (AGI) in excess of $110,000. For other
taxpayers, the credit begins to phase out at an AGI of $75,000. The child credit and the
income threshold amounts are not indexed for inflation.
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Tax Guide
