Uncle Sam gives you more credits
Thanks to the Taxpayer Relief Act of 1997, you may owe the Internal Revenue Service a lot less money this year.
And there are more ways to get help when doing your taxes.
That's the good news.
The bad news is you have to pay attention.
You can't "go by rote and just pull out last year's return," says tax preparer David Silverman, an enrolled agent and author of "Taxes for Dummies."
The most important change is the new child credit that takes effect this year, says Mr. Silverman.
For each child under 17, parents can take $400 directly off their total tax liability.
Tax credits differ from standard deductions in that they are subtracted directly from your total, net tax liability, rather than just reducing your taxable income, Silverman says.
So paying $400 less in taxes is a lot more attractive than paying tax on $400 less income.
Next year, the credit increases to $500.
The credit only applies to married couples earning less than $110,000, and is phased out between $110,000 and $120,000. For single parents the limits are $75,000 and $85,000.
The child tax credits come in addition to the personal exemption of $2,700 for each family member, Silverman says, though those exemptions also have income limits.
The exemptions reduce the amount of income you owe taxes on, rather than lowering your net tax bill.
They are lower for couples with incomes above $186,800; singles, above $124,500; married people filing separately above $93,400; and head-of-household filers who earn above $155,650.
The second most significant tax change this year, Mr. Silverman says, are new education credits: the Hope Credit and Lifetime Learning Credit.