J.K. Lasser's 1001 Deductions and Tax Breaks 2018

Your Complete Guide to Everything Deductible
 
 
Wiley (Verlag)
  • erschienen am 2. Oktober 2017
  • |
  • 496 Seiten
 
E-Book | ePUB mit Adobe DRM | Systemvoraussetzungen
978-1-119-38039-9 (ISBN)
 
A complete list of individual tax relief opportunities
J.K. Lasser's 1001 Deductions and Tax Breaks 2018 is the complete and thorough guide to reducing your tax burden. By listing every possible deduction and credit available to individual taxpayers, this book can help you achieve substantial savings on your 2017 tax return. Updated and expanded to cover new and changing tax law, this edition also includes an e-supplement covering the latest developments from Congress and the IRS to keep you fully up-to-date. Stop overpaying and gain peace of mind as you find the answers you need for your specific tax situation. Mine your paperwork for write-off opportunities, and claim your tax breaks correctly; easy-to-follow instructions give you clear guidance through the maze of worksheets to help you reclaim what is legally yours.
Echoing cries of "Can I claim...?", "How do I deduct...?", "Where do I find...?" mean it's tax season again, and America's most trusted tax advisor is here to take away the stress. Find answers, save money, and streamline the filing process.
* Examine your records for deduction opportunities
* Identify each and every deduction for which you qualify
* Learn about new or updated deductions for your 2017 return
* See what types of income are tax free
* Claim correctly, with the appropriate forms and evidence
Deductions and credits were put in place precisely to help everyday people like yourself keep more of their hard-earned money--but only if you claim them. Instead of mounting an expedition into impenetrable tax code, let an expert do the legwork for you: J.K. Lasser's 1001 Deductions and Tax Breaks 2018 gives you the straightforward, no-nonsense information you need to stop overpaying and keep more of what's yours.
1. Auflage
  • Englisch
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  • USA
John Wiley & Sons
  • 0,99 MB
978-1-119-38039-9 (9781119380399)
1119380391 (1119380391)
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BARBARA WELTMAN is an attorney and a nationally recognized expert in taxation for small businesses, as well as the author of many top-selling books on taxes and finance, including J.K. Lasser's Small Business Taxes. She is also the publisher of Idea of the Day¯®, a guest columnist for WSJ.com and U.S. News & World Report, is quoted regularly in major publications (including the New York Times, the Wall Street Journal, and Money magazine), and hosts a monthly radio show. Visit her at www.barbaraweltman.com.
Introduction vii
1. You and Your Family 1
2. Medical Expenses 32
3. Education Costs 79
4. Your Home 116
5. Retirement Savings 156
6. Charitable Giving 193
7. Your Car 221
8. Investing 237
9. Travel 275
10. Entertainment 296
11. Real Estate 314
12. Borrowing and Interest 340
13. Insurance and Catastrophes 354
14. Your Job 373
15. Your Business 405
16. Miscellaneous Items 434
Appendix A. Items Adjusted Annually for Inflation 460
Appendix B. Checklist of Tax-Free Items 465
Appendix C. Checklist of Nondeductible Items 469
Index 474

Introduction


Discussions about tax reform has got people talking about taxes. But say the word "taxes" and most people groan. There are good reasons for this response: First of all, the cost of paying your taxes annually can be a financial burden. You may feel taken to the cleaners every time you view your paycheck after withholding for federal income taxes (not to mention state income taxes as well as Social Security and Medicare taxes). And taxes are time consuming-costing individuals 8.9 billion hours annually to file their returns.

Second, you may not even have to deal personally with taxes, other than paying them. The IRS says that nearly 60% of taxpayers use paid preparers for their returns.

Third, the tax law is very complicated and changing all the time. According to the Tax Foundation, the Internal Revenue Code (Tax Code) has about 2.4 million words. There were only 11,400 words in the Tax Code in 1914, one year after the constitutional amendment authorizing the levy of an income tax. Between 2001 and 2012, there were 4,600 changes (which works out to more than one a day). Today the Tax Code is twice as long as it was in 1985. There have been major changes in the tax law nearly every year over the past 50 years-and this year is no exception! In addition, new court decisions and IRS rulings appear each day, providing guidance on how to interpret the law. The Tax Foundation says taxpayers spend more than $409 billion each year complying with federal tax rules.

Fourth, you have to know what the tax rules are and can't claim ignorance to avoid taxes and penalties. Even if you use a tax professional or tax preparation software to prepare your return, you remain responsible for your taxes. The Tax Court has noted that using software is not an automatic excuse to avoid underpayment penalties.

How can you combat the feeling of dread when it comes to taxes? It helps to know that the tax law is peppered with many, many tax breaks to which you may be entitled. These breaks allow you to not report certain economic benefits you enjoy or to subtract certain expenses from your income or even directly from your tax bill. As the famous jurist Judge Learned Hand once stated (in the 1934 case of Helvering v. Gregory in the Court of Appeals for the Second Circuit):

Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one's taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike, and all do right, for nobody owes any public duty to pay more than the law demands.

So get your tax affairs in order and reduce what you pay each year to Uncle Sam!

In getting a handle on how to do this by taking advantage of every tax break you may be entitled to without running afoul of the Internal Revenue Service (IRS), there are some simple rules to keep in mind. They include:

  • You must report all of your income unless a specific law allows you to exclude or exempt it (so that it is never taxed) or defer it (so that it is taxed at a later time).

  • You can claim deductions only when and to the extent the law allows. Deductions are referred to as a "matter of legislative grace"; Congress doesn't have to create them and does so only for some purpose (for example, to encourage economic activity or to balance some perceived inequity in the tax law).

  • Tax credits are worth more than tax deductions. A credit reduces your tax payment on a dollar-for-dollar basis; a $1,000 credit saves you $1,000 in taxes. A deduction is worth only as much as the top tax bracket you are in. Suppose you are in the 28% tax bracket, which means this is the highest rate you pay on at least some of your income. If you have a $1,000 deduction, it is worth $280 (28% of $1,000) because it saves you $280 in taxes you would otherwise have to pay.

  • Even if your income is modest, you may have to file Form 1040 (the so-called long form), rather than a simplified return (Form 1040A or 1040EZ), in order to claim certain tax benefits.

  • In a number of cases, different deduction rules apply to the alternative minimum tax (AMT), a shadow tax system that ensures you pay at least some tax if your regular income tax is lower than it would have been without certain deductions.

Whether you prepare your return by hand (as 6% of filers do), use computer software or an online solution (39%), or rely on a professional (55%), this book is designed to tell you how to get every tax edge you're entitled to. Knowing what to look out for will help you plan ahead and organize your activities in such a way that you'll share less of your hard-earned money with Uncle Sam.

Tax-Favored Items


There are 5 types of tax-advantaged items receiving preferential or favorable treatment under the tax law:

  1. Tax-free income-income you can receive without any current or future tax concerns. Tax-free income may be in the form of exclusions or exemptions from tax. In many cases, tax-free items do not even have to be reported in any way on your return.

  2. Capital gains-profits on the sale or exchange of property held for more than one year (long-term). Long-term capital gains are subject to lower tax rates than the rates on other income, such as salary and interest income, and may even be tax free in some cases. Ordinary dividends on stocks and capital gain distributions from stock mutual funds are taxed at the same low rates as long-term capital gains.

  3. Tax-deferred income-income that isn't currently taxed. Since the income builds up without any reduction for current tax, you may accumulate more over time. However, at some point the income becomes taxable.

  4. Deductions-items you can subtract from your income to reduce the amount of income subject to tax. There are 2 classes of deductions: those "above the line," which are subtracted directly from gross income, and those "below the line," which can be claimed only if you itemize deductions instead of claiming the standard deduction (explained later).

  5. Credits-items you can use to offset your tax on a dollar-for-dollar basis. There are 2 types of tax credits: one that can be used only to offset tax liability (called a "nonrefundable" credit) and one that can be claimed even if it exceeds tax liability and you receive a refund (called a "refundable" credit). Usually you must complete a special tax form for each credit you claim.

This book focuses on different types of tax-favored items: exclusions (tax-free income), above-the-line deductions that don't require itemizing, itemized deductions, tax credits, and other benefits, such as subtractions that reduce income. At the end of this Introduction you'll see symbols used to easily identify the type of benefit being explained.

Limits on Qualifying for Tax-Favored Items


In many cases, eligibility for a tax benefit, or the extent to which it can be claimed, depends on adjusted gross income (AGI) or modified adjusted gross income (MAGI).

Adjusted gross income is gross income (all the income you are required to report) minus certain deductions (called "adjustments to gross income"). Adjustments or subtractions you can make to your gross income to arrive at your adjusted gross income are limited to the following items:

  • Alimony payments

  • Archer Medical Savings Accounts (MSAs) (for accounts set up prior to 2008)

  • Business expenses

  • Capital loss deductions of up to $3,000

  • Domestic production activities deduction

  • Educator expenses up to $250

  • Employer-equivalent portion of self-employment tax

  • Forfeiture-of-interest penalties because of early withdrawals from certificates of deposit (CDs)

  • Health Savings Account (HSA) contributions

  • Individual Retirement Account (IRA) deductions

  • Jury duty pay turned over to your employer

  • Legal fees for unlawful discrimination claims

  • Moving expenses

  • Net operating losses (NOLs)

  • Performing artist's qualifying expenses

  • Qualified retirement plan contributions for self-employed individuals

  • Rent and royalty expenses

  • Repayment of supplemental unemployment benefits required because of the receipt of trade readjustment allowances

  • Self-employed health insurance deduction

  • Simplified employee pension (SEP) or savings incentive match plan for employees (SIMPLE) contributions for self-employed individuals

  • Student loan interest deduction up to $2,500

  • Travel expenses to attend National Guard or military reserve meetings more than 100 miles from home

  • Tuition and fees deduction up to $4,000 (if this deduction is extended for 2017; it expired at the end of 2016)

Figuring AGI may sound complicated, but in reality it's merely a number taken from a line on your tax return. For example, AGI is the figure you enter on line 37 of the...

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