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Young
Contact: Amy Inaba


Information Alaska Taxpayers Should Know


Washington, D.C., Mar 3 -






Americans need to recognize the changes made in tax policy
 
-Alaska Congressman Don Young wants to remind Alaskans about important tax changes for 1998 tax filings. The changes became effective Midnight, December 31st, 1998.

“Congress made some important changes in the tax code which will provide families with tax relief. I want all Alaskans to know of the important relief that may be available to themselves and their families,” said Alaska Congressman Don Young.



  1. A $500 per child tax credit, up from $400 per child in 1998. For each child under age 17, families will receive a $500 tax credit in 1999. The full credit applies to single filers with adjusted gross incomes less than $75,000 and joint filers with incomes less than $110,000. The credit will cover 48 million children.


  2. Expansion of Deductible Individual Retirement Accounts (IRAs). More Americans will qualify for individual retirement accounts thanks to a provision raising by $1,000 the income thresholds that limit participation in IRAs. In 1998, joint filers qualified for IRAs if their adjusted gross income was below $60,000. Effective January 1st, the phase-out range will increase to $61,000 for joint filers. The current $40,000 phase-out range for single filers will increase to $41,000. Taxpayers earning less than these limits are permitted a deductible contribution of up to $2,000 for these traditional IRAs.


  3. Higher Education Tax Relief for Students. Many students who have paid interest on qualified education loans will be able to deduct a higher portion of the interest paid from their income taxes. Qualified loans for higher education expenses are generally limited to tuition, fees, room and board, and related expenses. In 1998, the maximum deduction was $1,000. In 1999, the maximum deduction rises to $1,500. Approximately 3 million taxpayers will claim this deduction.


  4. Relief from Death Taxes. The current $625,000 exemption from death taxes is increased to $650,000 in 1999, on its way to $1,000,000 in 2006.


  5. Letting Seniors Keep More of their Money. Seniors between the ages of 65-69 will be able to earn up to $15,500 without losing any of their Social Security benefits, up from $14,500 in 1998. The limit will increase to $30,000 in 2002. Approximately 800,000 seniors will be helped by the increase in the earnings limit.


  6. Making Health Care More Affordable. More than three million small businessmen and women will be able to deduct 60% of the cost of their health insurance premiums in 1999, up from 45% in 1998. The deduction will increase to 100% in 2003.


  7. Small Businesses Expensing Increased. Roughly 700,000 small businesses will be able to deduct up to $19,000 in 1999 in expenses for tangible personal property that is purchased for use in the active conduct of a trade or business. The deduction is up from $18,500 in 1998 and will phase up to $25,000 in 2003 and thereafter.


  8. Home Office Deductions. Two million small business owners will be able to claim the home office deduction in 1999 since Congress clarified the definition of the “principal place of business” as qualification for the deduction. Congress made this clarification in the 1997 Taxpayer Relief Act but 1999 is the first year it goes into effect.


  9. New Protections for Taxpayers. Next year will be the first full year that taxpayers no longer carry the burden of proof in any court proceedings with the Internal Revenue Service (IRS). The change places the burden of proof on the IRS as opposed to the taxpayer.


  10. No Seizures of Homes Without Court Orders. Beginning January 19, 1999, the IRS will no longer be able to seize taxpayers' principal residences without due process of law and judicial approval. Congress ordered the IRS to afford taxpayers adequate notice of collection activity and due process before the IRS could seize homes.


  11. Help for Taxpayers in Litigation with the IRS. Beginning January 19, 1999, taxpayers will be allowed to recover the reasonable administrative costs they incur when the IRS takes a position against them that is not substantially justified.


  12. Tax Incentives to Encourage Donations to Charities. Next year will be the first year that the tax deduction for certain gifts of appreciated stock to charitable private foundations is permanent. Prior to last year, the deduction was temporary and had to be renewed annually. Roughly $375 million in appreciated stock was donated to private foundations in 1997.