The IRS has recently announced certain rates and limits that will impact your 2000 tax filing (which will be due on April 15, 2001). These rates and limits were announced by the IRS in Rev.Proc. 99-42 (published in the Internal Revenue Bulletin 1999-46, which you can select and download in Adobe Acrobat format from the IRS website).

I realize we're just closing out the 1999 tax year but, since we have many people who are already planning their 2000 tax issues, and since questions on these rates and limits will come up at various times throughout the year, I thought it would be appropriate to provide some of them to you now… for your use throughout the year. So here we go:

Standard Deduction: You know what this is... if you don't have enough deductions to allow you to itemize, you'll get a standard deduction... just for being you. Here's what you'll get in 2000:

Married Filing Jointly or Qualifying Widow(er): $7,350
Single: $4,400
Head of Household: $6,450
Married Filing Separate: $3,675


Additional deduction for Elderly/Blind -- Married: $850
Additional deduction for Elderly/Blind -- Unmarried: $1,100


Standard deduction for a taxpayer claimed as a dependent: $700

Personal or Dependent Exemption: As you know, you are allowed a deduction for yourself and each of your dependents. For year 2000, that exemption/dependent deduction is $2,800.

Beginning/Ending of Personal Exemption Phaseout Range -- Based on Your AGI:
If your Adjusted Gross Income (AGI) reaches certain levels, you lose the benefit of your personal and dependent exemptions for the year. Here are the ranges at which you begin to lose your exemptions -- and where you'll completely lose them:

Married Filing Jointly or Qualifying Widow(er): $193,400/$315,900
Single: $128,950/$251,450
Head of Household: $161,150/$283,650
Married Filing Separate: $96,700/157,950

Beginning of Itemized Deduction Phaseout Range -- Based on AGI: If your AGI exceeds certain limits, your itemized deductions will be reduced. For tax year 2000, those limits will be:

Joint, Single, Head of Household: $128,950
Married Filing Separate: $64,475

Gift and Estate Tax Unified Credit Equivalent: This is the amount that you can gift (in total) and/or leave, after your death, to other beneficiaries without incurring any federal gift or estate tax: $675,000

FICA/SE Tax Information: As you know, if you are an employee, you pay FICA (including Medicare) on those wages. And, if you are self-employed, you pay SE (self-employment) taxes on those earnings. Here is your FICA information for 2000:

FICA/SE Tax Maximum Earnings: $76,200
FICA (OASDI and HI combined) Tax Rate (Employee Portion): 7.65%
SE (OASDI and HI combined) Tax Rate: 15.3%


Remember, these are the rates and limits for the Old Age, Survivors, and Disability Insurance (OASDI) portion of FICA. The Hospital Insurance (HI) portion of FICA (1.45% for employees and employers alike, and 2.9% for self-employed folks) applies to all wages and/or earned income without any limits.

Auto Standard Mileage Allowances: If you use your auto for business (Commuting Expenses), medical, charity, and/or moving purposes (Moving Expenses), you're allowed a "standard" mileage deduction rate. For 2000, those rates are:

Business: 32.5 cents/mile
Charity: 14 cents/mile
Medical or Moving: 10 cents/mile

Retirement Plan Limitations: As you should be aware, there are limits for the amounts you can contribute to various retirement plans. For 2000 those limits will be:

Employee Deductible Contributions to a 401(k) and/or 403(b) Plan: $10,500
Employee Deductible Contributions to a 457 Plan: $8,000

Section 179 Deduction: If you purchase qualified assets for a business, you can elect to "write off" those assets in the year of purchase, rather than depreciating them and recovering the cost over a number of years. For 2000, you are allowed a Section 179 election to expense up to $20,000 of qualified purchases.

Earnings Ceiling for Social Security: When you work and draw Social Security benefits, your earnings are limited by the Social Security Administration. If you exceed those earnings, your Social Security benefits could be reduced (or even eliminated). Please don't confuse these limitations with the limitations that may subject your Social Security benefits to various levels of taxation... they are completely different, separate, and unique. If you would like to read more about Social Security and income tax issues, please do so in the Archives on that very subject. That said, the 2000 Social Security earnings limitations are:

Under age 65: $10,080
Age 65 to 69: $17,000
Age 70 and above: Unlimited

Tax Rates: Last, but certainly not least, here are the tax rate tables for tax year 2000. (Remember that these tables are based on taxable income... which is generally your AGI, less your itemized/standard deduction, and less your personal exemptions):

Single
$0 - $26,249 = 15%
$26,250 - $63,549 = 28%
$63,550 - $132,599 = 31%
$132,600 - $288,349 = 36%
$288,350 and above = 39.6%


Married Filing Joint and Qualifying Widow(er)
$0 - $43,849 = 15%
$43,850 - $105,949 = 28%
$105,950 - $161,449 = 31%
$161,450 - $288,349 = 36%
$288,350 and above = 39.6%


Head of Household
$0 - $35,149 = 15%
$35,150 - $90,799 = 28%
$90,800 - $147,049 = 31%
$147,050 - $288,349 = 36%
$288,350 and above = 39.6%


Married Filing Separate
Simply take the Married Filing Joint rates and divide by two, and you'll have your Married Filing Separate rates for 2000.

Well, that should give you enough to get started. Additional information/rates/limits is included in Rev.Proc. 99-42 (found in Internal Revenue Bulletin 1999-42, which you can select and download from the IRS website). If there is something that you think you may be missing, don't hesitate to drift on over to the IRS website and review this information in it's entirety. And, as always, if you have any questions on any of the rates or limits, don't be afraid to post 'em in the Tax Strategies message folder.

- November 26, 1999

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