Tax Law Changes:

New Offerings From the IRS for 1999

Capital Gain Distribution - Schedule D Not Necessary for All

You may not have to file Schedule D to report capital gain distributions any more if all three of the following criteria apply to you:

  • The only amounts you have to report on Schedule D are capital gain distributions from box 2a of Forms 1099-DV or substitute statements.
  • None of the Forms 1099 or substitute statements have an amount in box 2b (28% rate gain), box 2c (unrecaptured section 1250 gain), or box 2d (section 1202 gain).
  • If you are filing Form 4952 (relating to investment interest expense deduction), the amount on line 4e of that form is not more than zero.

    If all three of the above apply, enter your capital gain distributions on line 13 and check the box on that line. Also, be sure you use the Capital Gain Tax Worksheet to figure your tax.

    Child Tax Credit
    For 1999, you may be able to claim this tax credit for as much as $500 for each of your qualifying children under the age of 17.

    Interest on Student Loans
    You may be able to deduct up to an increased limit of $1,500 for interest paid on a qualified student loan. The deduction is claimed on line 24 of Form 1040 or line 16 of Form 1040A. In 2000, the limit will increase to $2,000.

    IRA Deductions
    You may be able to take an IRS deduction if you were covered by a retirement plan and your modified adjusted gross income is less than the amounts that follow:

    • Single, head of household or married filing separately and you lived apart from your spouse for all of the year - $41,000
    • Married and filing jointly or a qualified widow(er) - $61,000

    Tax From Recapture of Education Credits
    If you claimed an education credit on last year's tax return and received a refund of tuition and related expenses or received tax-free educational assistance this year, you may owe this tax.

    Self-Employed Health Insurance Deduction
    The part of your self-employed health insurance premiums has been increased for 1999 to 60%.

    Earned Income Credit
    The maximum income you can earn and still be able to qualify for an earned income credit has increased in 1999. Following are the newly increased income maximums:

    • Your earned income is no more than $26,928 and have one child
    • Your earned income is no more than $30,580 and have two or more children
    • Your earned income is no more than $10,200 and have no children, are between the ages of 25 and 65 and cannot be claimed as a dependent on anyone else's tax return

    Foreign Earned Income Exclusion
    The amount of foreign income that you can exclude has been increased to $74,000 in 1999.

    Business Standard Mileage Rate
    The rate for business use of a vehicle has decreased in 1999. Prior to April 1, 1999, the business standard mileage rate is 32½ cents per mile. The rate after March 31st, 1999 is 31 cents per mile.

    Stop Smoking Program
    Costs incurred for prescriptions and programs related to a stop smoking mission can now be included in deductible medical expenses.

    Exemption Amounts
    You are now entitled to a $2,750 deduction for each qualified exemption you may have. If you have a high income, this exemption amount could be phased out.

    Limits on Itemized Deductions
    Some itemized deductions may now be limited if your income is higher than $126,600 if filing jointly or $63,300 if filing separately.

    Social Security and Medicare Taxes
    The maximum wages subject to social security taxes in 1999 has been increased to $72,600. All wages are subject to Medicare taxes.