 Some relief available for taxpayers this year
State, national tax forms have changes
Numerous resources to complete tax forms
Advertiser Staff
 Student LOAN DEDUCTION: Up to $2,000 in student loan interest paid in 2000 can be deducted, increased from $1,500 in 1999.
CAR DEDUCTIONS: The IRS standard mileage rate for business use of an automobile increased to 32.5 cents a mile for 2000. That is up from 31 cents a mile for most of 1999.
SOCIAL SECURITY TAX: Higher-paid workers are subject to Social Security tax on the first $76,200 of their job earnings in 2000, up from $72,600 in 1999.
TRADITIONAL IRAs: The income eligibility limits for deductible IRAs have increased slightly for taxpayers who are covered by an employer retirement plan. At least a partial IRA deduction will be available to joint filers with adjusted gross incomes of less than $62,000 and to singles with incomes under $42,000.
BUSINESS EQUIPMENT: Self-employed individuals and other small businesses are entitled to immediately write off up to $20,000 of business equipment purchases made in 2000 without having to depreciate the costs over a period of years. The 1999 limit was $19,000.
HOUSEHOLD HELP: If you paid a housekeeper, gardener or other household helper less than $1,200 last year, you won’t have to pay Social Security or Medicare taxes on behalf of the worker. The $1,200 threshold is up from $1,100 in 1999.
INFLATION ADJUSTMENTS: As is the case each year, the tax tables, standard deduction, personal exemption, earned income tax credit and other key elements of the tax system have been adjusted for inflation. For instance, the personal exemption for taxpayers and their dependents has increased by $50 to $2,800. The standard deduction has increased by $150 on a joint return to $7,350, and by $100 on "single" returns to $4,400.
EDUCATIONAL ASSISTANCE: For workers who received financial aid from their employer to take college courses, the tax exemption for employer-provided educational assistance was renewed. The break was slated to expire in mid-2000, but Congress extended it through the end of 2001. The exemption allows employees to receive tax-free from their employer up to $5,250 a year in tuition assistance for undergraduate studies.
BUSINESS TRAVEL: Business trip meals are normally only 50-percent deductible. But airline pilots, truck drivers and other transportation workers get to deduct more. They can write off 60 percent of their out-of-town meal expenses, up from 55 percent in 1999.
LUMP-SUM PENSIONS: The favorable five-year averaging method for computing tax on lump-sum pension distributions was repealed for payouts after 1999.
"ELECTRONIC" SIGNATURE: Filing tax returns "electronically" to the IRS will be a completely paperless process for most everyone this tax season. Instead of having to send in a paper signature form, taxpayers using "e-file" will be able to create an electronic signature by choosing a "personal identification number" (PIN) and entering two pieces of information from their 1999 tax-year return.
NO MORE 1040PC FORMAT: There will one less type of tax return format to choose from this tax season. The IRS no longer accepts paper returns in the shortened "1040PC" format, which allowed individuals using tax-preparation software to generate a computer printout of their return that was much shorter than the regular 1040. Instead of printing out the entire page of every form included in the return, the 1040PC format only printed lines where taxpayers had an entry.
PERSONAL TAX CREDITS: Individuals will be protected from having some valuable tax credits reduced by the "alternative minimum tax" (AMT). The protected benefits include the child tax credit, the Hope and Lifetime college tuition credits, the dependent-care credit and the adoption credit. On 2000 returns, the credits can be used to offset both the regular tax and the AMT. On 1999 returns, the credits could be used only to offset regular tax.
PREPARER PERMISSION: Taxpayers who use a paid preparer can now check a box on the tax form to give the IRS authority to contact the preparer directly to resolve problems that arise in the processing of the return.
WITHHOLDING: Tougher withholding and estimated tax rules take effect for higher-income taxpayers. As a general rule, withholding and estimated payments for the year must total at least 100 percent of the prior year’s tax or 90 percent of the current year’s anticipated tax, whichever is less.
But special rules apply to taxpayers with adjusted gross incomes exceeding $150,000.
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