New for 1998: How Changes in the Tax Law Affect the Filing of Individual Income Tax Returns
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The Taxpayer Relief Act of 1997 greatly affected the way individuals file their income tax returns. The purpose of this Act is to provide relief for individual taxpayers in the form of tax credits and deductions. By the end of the 1998 tax year, most of the provisions of this Act will be in effect. The focus of my research was to analyze and provide examples of the major provisions affecting individuals. Many of the sections studied dealt with children and education, including the Child Tax Credit, Hope Scholarship Credit, Lifelong Learning Credit, and the standard deduction for dependents. The rest of the sections focused on savings and investment incentives, such as Roth lRAs, changes to conventional lRAs, savings from the sale of a principal residence, and changes in the rules for capital gains. The overall effect of the Taxpayer Relief Act will not be clear until well after the 1998 Individual Income Tax Returns are filed in 1999. It is expected, however, that many individuals will take advantage of the new tax credits and deductions. In order to use each provision effectively, taxpayers should consult a tax planner for advice.