Members of the Maryland Association of Certified Public Accountants are answering readers' tax questions through April 15. Here, MDCPA members answer some basic questions.
Q. Can you explain the new tax breaks for the care of children?
A. Beginning in 1998, you may claim a child tax credit of up to $400 for each qualifying child who is under age 17 as of Dec. 31 of the tax year. The credit is phased out for adjusted gross incomes starting at $75,000 for single taxpayers or $110,000 for taxpayers who are married and filing jointly. The tax credit is reduced by $50 for each $1,000 of adjusted gross income above the thresholds mentioned. In 1999, the tax credit is worth up to $500.
Q. What is the limit in contributions to a 401(k) plan?
A. In general, assuming special limitation rules do not apply and if the employer offers a 401(k), the maximum contribution for 1998 is $10,000. The contribution lowers taxable gross income and earnings grow tax-deferred until retirement.
The above advice is for general purposes only and is not intended as legal, accounting or tax advice. Specific situations may vary.
To ask a tax question, call Sundial, The Sun's telephone information service, at 410-783-1800. Call 410-268-7736 in Anne Arundel County, 410-836-5028 in Harford County, 410-848-0338 in Carroll County. Using a Touch-Tone phone, punch in the four-digit code 6225 after the greeting. You can also submit questions by e-mail through The Sun's Web site: www.sunspot.net. Click on Business.
Selected questions will be answered in the Business section. No questions will be answered personally.
Pub Date: 2/02/99