MSNBC and Ernst & Young's 1997 Tax Law Calculator


 
New laws
CAPITAL GAINS
Tax rates for long-term capital gains go from two rates (15 or 28 percent) to six (ranging from 8 to 28 percent), depending on the taxpayer's income, length of the holding period, date of purchase and type of investment. The first $500,000 in gain from the sale of a principal residence for joint filers ($250,000 for a single person) is excluded from taxation. The one-time exclusion of $125,000 in profits on the sale of a home for those 55 or over has been eliminated.
CHILD TAX CREDIT
A $400-per-child credit takes effect in 1998, rising to $500 in 1999, for children under 17 at the end of the taxable year. The credit is phased out for joint returns with an adjusted gross income above $110,000. For every additional $1,000 over this threshold, the credit is reduced by $50. The threshold is $75,000 for singles and $55,000 for separate filers. Low-income taxpayers may be eligible for a refund of this credit if they've paid Social Security taxes.
EDUCATION
The law provides two credits for education expenses -- the Hope Scholarship (paid after Dec 31st, 1997) credit and the Lifetime Learning credit (paid after June 30th, 1998). The Hope credit provides up to $1,500 a year per student for the first two years of college. The Lifetime credit can be used for any year of education including education which is not part of a degree program. The credit begins at 20 percent of $5,000 and phases up to 20 percent of $10,000. Both credits are phased out for joint filers with an adjusted gross income of $80,000-$100,000 ($40,000-$50,000 for single filers) and are not available for couples filing separately.
  Budget Deal:
Calculate the impact on your taxes
The budget deal, signed into law Aug. 5 by President Bill Clinton, provides the biggest tax cut in 16 years and includes far-reaching provisions that will affect many Americans. Among the major beneficiaries of the complicated new law are millions of investors, families and college students. Use the online calculator below, developed jointly by MSNBC and Ernst & Young, to figure out whether you or your family will save money on federal taxes under the key tax-cutting provisions in the legislation.
Tax Calculator (Do not enter dollar signs or commas)
Filing status:
Number of dependents
Number of dependent children under age 17 at end of tax year
SelfSpouse
Taxable wages
Self-employment income
Other ordinary income/-losses
(use "-" sign)
Capital Gains:
Investments sold after July 28 and held more than 18 months
Investments sold after May 6 but before July 29, and held more than 12 months
Investments sold prior to May 7 and held more than 12 months or investments sold after July 28 and held 12 to 18 months.
Other capital gains
Deductions
Standard deduction Itemized deduction
Earned Income Credit:
Earned income credit (if applicable)
Education:
Tuition and fees to be paid from Jan. 1 to Dec. 31, 1998, for students in their first two years of college enrolled more than half time.
Number of students in the household to be enrolled in their first or second year of college from Jan. 1 to Dec. 31, 1998.
Tuition and fees to be paid in 1999 for students in their first two years of college enrolled more than half-time.
Number of students expected to be in their first or second year of college in the household in 1999.
Tuition and fees expected from July 1-Dec. 31, 1998, for college (other than the first two years), graduate school and education for retaining or improving job skills.
Tuition and fees expected in 1999 for college (other than the first two years), graduate and education for retaining or improving job skills.
 

 

After calculating the difference for yourself, see how the new law would affect two hypothetical American families, click on one of the selections below.

John and Samantha Smith have an annual income of $40,000. They have 3 children, age 8, 10 and 17. The oldest will start college in September 1998; the total annual cost for tuition and fees in his freshman year is $20,000.

Mary and Charles Wong (annual income $55,000) are active investors. They bought 5000 shares of stock for $30 a share on Nov. 14, 1995, and sold it for $60 on July 30.


Old Law
New Law
1997
1997
1998
1999
Adjusted Gross Income
Personal Exemptions
Standard/Itemized Deduction
Taxable Income
Federal Income Tax
Self-employment Tax
Earned Income Credit
Child Tax Credit
Supplemental Child Tax Credit
Hope Credit
Lifetime Learning Credit
Federal Income Tax After Credits
% Difference
%
%
%
%

NOTE: The calculations are estimates, based on 1997 tax tables. Official data has not yet been released by the Internal Revenue Service. Any information you enter for this calculator is stored only on your computer and will not be transmitted over the Internet, seen by any members of MSNBC’s staff or sold to third parties.

Click here for more information from Ernst & Young on the new tax law or on personal finances.