The explanations and examples in this publication reflect the interpretation by the Internal Revenue Service (IRS) of tax laws enacted by Congress, Treasury regulations, and Court decisions.

However, the information given does not cover every situation and is not intended to replace the law or change its meaning.

This publication covers some subjects on which a court may have made a decision more favorable to taxpayers than the interpretation by the IRS. Until these differing interpretations are resolved by higher court decisions or in some other way, this publication will continue to present the interpretation by the IRS.

Introduction

1. Tax Changes for Individuals           Standard Deduction Amount Increased           Exemption Amount Increased           Limit on Itemized Deductions Increased           Reporting Capital Gain Distributions           Child Tax Credit Increased            Earned Income Credit           Employee Business Expenses           Health Insurance Deduction for the Self-Employed           Self-Employment Tax            Stop-Smoking Programs           Depreciating Property Used in a Rental Activity           Limit on Personal Credits           Depreciation Recovery Period           Gains from Certain Constructive Ownership Transactions           Installment Method of Accounting           Tax Payment by Credit Card           Interest Netting           Interest Rate on Overpayments           Refund Offset Against Debt           Preparer Identification Number

2. Tax Changes for Businesses           Standard Mileage Rate           Production Flexibility Contract Payments           Business Use of Your Home           Depreciation and Section 179 Deduction           Marginal Production of Oil and Gas           Health Insurance Deduction for the Self-Employed           Self-Employment Tax           General Business Credit           Depreciation Recovery Period for Alternative Minimum Tax (AMT)           Gains from Certain Constructive Ownership Transactions           Additions to Definition of Noncapital Assets           Installment Method of Accounting           Electronic Deposits of Taxes           Electronic Filing Delayed for Certain Partnerships           Preparer Identification Number           OID List Now Available From IRS Website

3. IRAs and Other Retirement Plans           Distributions Due to an IRS Levy           Hardship Distributions           Discrimination Safe Harbor

4. Gift and Estate Taxes           Vaccines

5. Excise Taxes           Disclosure Rules

6. Exempt Organizations           Foreign Earned Income Exclusion

7. Foreign Issues           Award of Administrative Costs           Notice of IRS Contact of Third Parties           Last Date for Filing Tax Court Petition           Explanation of Claim for Refund Disallowance

8. Taxpayer Rights           Help With Unresolved Tax Problems

Introduction

This publication highlights tax law changes that take effect in 1999 and 2000. Each chapter is divided into separate sections for each year.

Many of the provisions of the Ticket to Work and Work Incentives Improvement Act of 1999 and other tax law changes are discussed in this publication. They include the following items.

• Change in the definition of an eligible foster child for purposes of the earned income credit.
• Deducting stop-smoking programs as medical expenses.
• Extension of the credit for first-time homebuyers in the District of Columbia.
• Extension of certain general business credits.
• Extension of the tax-free status of up to $5,250 of employer-provided educational assistance.
• Increase in the health insurance deduction for the self-employed.
• Postponement of tax deadlines because of Y2K failures.
• Repeal of the installment method for most accrual method taxpayers.

See the later discussion of each topic for more information.

Adjusting your withholding or estimated tax payments for 2000. If your tax for 2000 will be more or less than your 1999 tax, you may need to adjust your withholding or estimated tax payments accordingly. If your tax is decreasing, you can get the benefit of lower taxes throughout the year. If you will owe more tax, you can avoid a penalty when you file your tax return.

See the following table for forms and publications that will help you adjust your withholding or estimated tax payments. See chapter 8 for information on ordering forms and publications.

To adjust your....	Get form...	And publication...
Withholding	W-4, Employee's Withholding Allowance Certificate	919, Is My Withholding Correct for 1999?
Estimated tax payments	1040-ES, Estimated Tax for Individuals	505, Tax Withholding and Estimated Tax

Photographs of missing children.

The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling:

1-800-THE-LOST (1-800-843-5678) if you recognize a child.

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