Looking Ahead to 1999

Some key tax changes for the coming year:

* Payroll tax hike: The amount of income subject to the 12.4% payroll tax (half paid by employers) that funds Social Security rises from $68,400 in 1998 to $72,600 in 1999. This is the largest such increase since 1979 and is expected to affect 9 million people.

* Child credit: The credit for children 16 and under for middle-class parents rises to $500 from the $400 allowed in 1998.

* Health deduction: Self-employed people will be able to deduct 60% of their health insurance premiums, up from 45%.

* Home office: An expanded definition of the home office will let about 2 million businesspeople claim a deduction for the first time on 1999 returns, although it may also subject them to capital gains when they sell the home.

* Mileage rate: The IRS has delayed from Jan. 1 to April 1 the effective date for a reduction in the reimbursement rate for business driving because companies wanted more time to convert software. The reduction, from 32.5 cents per mile to 31 cents, is based on lower fuel prices and slower auto depreciation rates.

* Senior earnings: Senior citizens ages 65 to 69 can earn up to $15,500 in 1999 without losing any of their Social Security benefits, compared with $14,500 in 1998. (The limit increases to $30,000 in 2002.)

* IRS limits: Beginning Jan. 19, the IRS cannot seize a taxpayer’s principal residence without a court order. Several other taxpayer protections also take effect in 1999.