Don't despair! There have been a number of changes that you should know about because they could result in more dollars in your pockets, or a smaller check to Uncle Sam on April 15, 2000. However, compared to last year’s changes from The Taxpayer Relief Act of 1997 (please see our article on this topic), the volume of changes for your 1999 tax return is nominal. Here are some highlights for separated and divorced parents:

The amount you can deduct for each exemption has increased from $2,700 in 1998 to $2,750 in 1999. If you are in the 30% federal tax bracket, each exemption you can take is now worth $825, plus the child tax credit discussed below. Note that you lose all or part of your exemptions if your adjusted gross income is above a certain amount. For 1999, the phase out begins at $94,975 for persons filing married filing separately, $126,000 for unmarried individuals, $158,300 for heads of household, and $189,950 for married persons filing jointly.

If you have any questions regarding whether you are entitled to claim your children as exemptions, remember that the exemption goes to the custodial parent unless the noncustodial parent has a decree or agreement providing that he/she can claim the deduction, or the custodial parent waives in writing his/her right to the deduction in favor of the noncustodial parent.

The maximum child tax credit had increased from $400 to $500. If you can claim the child as your dependent, you are also eligible to also take the child tax credit. This credit also gets reduced if your adjusted gross income is above a certain amount. For 1999, this threshold is $55,000 for persons filing married filing separately, $75,000 for singles and heads of household, and $110,000 for married persons filing jointly.

A tax credit means more money in your pocket. It reduces the amount you owe. So long as you have income, a $500 tax credit is worth $500.

For 1999, the deduction increases to 60% of the amount you paid for medical insurance for yourself and your family.

Information Provided by: Anju D. Jessani, Mediator Was this helpful? Like our site & let us know.

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If the divorce is being filed under one of the seven fault grounds (including extreme cruelty, adultery, abandonment, substance or alcohol addiction, institutionalization, deviant sexual conduct and incarceration), the 18 month separation period, required for a no-fault divorce, is waived. However, each ground for divorce has its own stipulations.