How to Pay Zero Taxes 2013

How to Pay Zero Taxes 2013

Authors: Jeff A. Schnepper

Published: November 2012

eISBN: 9780071803632 0071803637 | ISBN: 9780071803625

Acknowledgments

CHAPTER 1 Tax Insanity

CHAPTER 2 Is It Legal?

CHAPTER 3 How Our Tax System Works

CHAPTER 4 Exclusions—Tax-Free Money

A Alternatives to “Earned Income”

1 Hospitalization Premiums (Sec. 106)

2 Group Life Insurance Premiums (Sec. 79)

3 Group Legal Services Plans (Sec. 120)

4 Accident and Health Plans (Sec. 105)

5 Employee Death Benefits (Sec. 101)

6 Merchandise Distributed to Employees on Holidays

7 “Expenses of Your Employer”

8 Meals and Lodgings (Sec. 119)

9 Employee Discounts

10 Workers’ Compensation (Sec. 104)

11 “Cafeteria” Plans (Sec. 125)

12 Dependent Care Assistance Program (Sec. 129)

13 Employer Educational Assistance (Sec. 127)

14 Employee Awards (Sec. 274)

15 Clergy Housing Allowance (Sec. 107)

16 Miscellaneous Fringe Benefits

B Donative Items

17 Gifts, Bequests, and Inheritances (Sec. 102)

18 Scholarships and Fellowships (Sec. 117)

19 Prizes and Awards (Sec. 74)

C Investors

20 Interest on State and Municipal Obligations (Sec. 103)

D Benefits for the Elderly

21 Public Assistance Payments

22 Social Security and Other Retirement Benefits

23 Annuities (Sec. 72)

24 Sale of Your Home (Sec. 121)

E Miscellaneous Individual Exclusions

25 Carpool Receipts

26 Damages (Sec. 104)

27 Divorce and Separation Arrangements (Sec. 71)

28 Life Insurance (Sec. 101)

29 Qualified State Tuition (§529) Programs

30 Your Home—The Mother of All Tax Shelters!

31 Disabled Veteran Payments

32 Exclusion of Income for Volunteer Firefighters and Emergency Medical Responders

33 Unemployment Benefits

34 Homeowner Security

35 Reimbursed Costs to Parents of Children with Disabilities

36 Wrongful Conviction and Incarceration

37 Restitution Payments

38 Frequent Flier Miles

F Schedule of Excludable Items

CHAPTER 5 Credits—Dollar-for-Dollar Tax Reductions

A Estimated Tax and Withholding Exemptions

B Credits

39 The Earned Income Credit (Sec. 32)

40 Excess Social Security Tax

41 The Child and Dependent Care Credit

42 Credit for the Elderly or Permanently and Totally Disabled

C Special Credits

43 Work Opportunity Credit (Formerly Targeted Jobs Tax Credit) (Sec. 51)

44 Welfare to Work Credit (Sec. 51)

45 Research Tax Credit (Sec. 41)

46 Orphan Drug Tax Credit

47 Adoption Assistance

48 Hope Scholarship Credit

49 American Opportunity Tax Credit

50 Lifetime Learning Credit

51 Child Tax Credit

52 Disability Credits

53 Health Insurance Credit

54 Saver’s Credit

55 Small Employer Credit

56 Electric Vehicle Credit

57 Credit for Residential Energy Efficient Property

58 Energy Saving Home Improvement Credit

59 Energy Efficient Appliances

60 Hybrid Vehicles Credit

61 Telephone Tax Refund

62 First-Time Home Buyer Credit

63 “Making Work Pay” Tax Credit

64 Plug-in Electric Drive Vehicle Credit (Sec. 1141)

65 Plug-in Electric Vehicle Credit (Sec. 1142)

66 Conversion Kits (Sec. 1143)

67 Treatment of Alternative Motor Vehicle Credit as a Personal Credit Allowed against AMT (Sec. 1144)

68 Small Business Health Insurance Credit

69 Foreign Tax Credit

CHAPTER 6 “Above the Line” Deductions

A Deductions for Adjusted Gross Income

70 Trade and Business Deductions

71 Employee Business Expenses of Actors and Other Performing Artists

72 Employee Business Expenses

73 Alimony

74 Interest on Qualified Education Loans

75 Retirement Plan Payments

76 Self-Employment Tax

77 Health Insurance Deduction for Self-Employeds

78 Moving Expenses

79 Clean Fuel Vehicles

80 Deduction for Qualified Higher Education Expenses—Tuition and Fees

81 Legal Fees

82 Classroom Materials

83 Medical Savings Accounts (Archer Medical Savings Accounts)

84 Health Savings Accounts

85 Sales Tax Deduction on Motor Vehicles

CHAPTER 7 “Below the Line”Deductions

A The Importance of Filing Status

B Tax Planning with Itemized Deductions

86 Medical Expenses

87 Income Taxes

88 Real Property Taxes

89 Personal Property Taxes

90 Interest

91 Mortgage Insurance

92 Charitable Contributions

93 Casualty Losses

94 Theft Losses

95 Miscellaneous Trade and Business Deductions of Employees

96 Job Loss Insurance

97 Travel Expenses

98 Transportation Expenses

99 Meals and Entertainment Expenses

100 Gifts

101 Reimbursable Employee Business Expenses

102 Educational Expenses

103 Limit on Itemized Deductions

C Schedules of Deductions

104 Medical Deductions

105 Deductible Taxes

106 Charitable Deductions

107 Casualty and Theft Loss Deductions

108 Miscellaneous Deductions

109 Employee Miscellaneous Deductions

110 Investor Deductions

CHAPTER 8 Traditional Tax Shelters

A Deferral and Leverage

111 Real Estate

112 Fees in Public Real Estate Partnerships

113 Oil and Gas

114 Equipment Leasing

115 Single-Premium Life Insurance

116 Cattle Feeding Programs

117 Cattle Breeding Programs

118 Tax Straddles

119 Art Reproduction

120 Noncash Gift Shelters

121 Municipal Bond Swaps

B How to Analyze a Tax Shelter

122 Getting Out of the Tax Shelter

123 Master Limited Partnerships

124 Abusive Shelters

CHAPTER 9 Super Tax Shelters

A Family Shifts

125 Unearned Income of Minor Children

126 Outright Gifts

127 Clifford Trusts

128 Interest-Free Loans

129 The Schnepper Shelter: Gift Leasebacks

130 The Schnepper Deep Shelter

131 Family Partnerships

132 Family Trusts

133 The Schnepper Malagoli Super Shelter

134 Employing Members of the Family

135 Author’s Delight

B Running Your Own Business

136 Your Home

137 Your Car

138 Meals and Entertainment

139 Travel and Vacation

140 Gifts

141 Advertising

142 Deductible Clothes

143 Creative Deductions—Busting the IRS

144 Medical Premiums

145 Borrowing from Your Company

146 Miscellaneous Corporate Advantages

CHAPTER 10 Investment Planning to Save Taxes

147 Short Sales

148 Broad-Based Index Options and Regulated Futures Contracts (RFCs)

149 Wash Sales

150 Premiums on Taxable and Tax-Exempt Bonds

151 Original Issue Discount (OID)—Taxable Bonds

152 Original Issue Discount (OID)—Tax-Exempt Bonds

153 Market Discount

154 Municipal Bond Swaps

155 Employee Options—Nonqualified

156 Incentive Stock Options (Sec. 422A)

157 Year-End Stock Sales

158 Fund Strategies

159 Dividends

160 Tax-Exempt Income

161 Old Prices

162 Alternative Minimum Tax for Individuals

163 U.S. Savings Bond Exclusion (Sec. 135)

164 Madoff Losses

CHAPTER 11 Last-Minute Tax Planning

165 Defer Taxes

166 Accelerate Expenses

167 Accelerate Special Deductions

168 Dependents and Personal Exemptions

169 Phase-out of Exemptions

170 Timing Strategies

171 Retirement Plans

172 Individual Retirement Plans (IRAs)

173 H.R. 10 or Keogh Plans

174 Marital Status

175 The Goldinger Deferral

CHAPTER 12 The Economic Growth and Tax Relief Reconciliation Act of 2001

176 Marginal Rate Reductions

A Individual Income Tax Rate Structure

B Phase-out of Restrictions on Personal Exemptions

C Phase-out of Itemized Deductions

177 Tax Benefits Relating to Children

A Increase and Expand the Child Tax Credit

B Extension and Expansion of Adoption Tax Benefits

C Child Care Credit

178 Marriage Penalty Relief Provisions

A Standard Deduction Marriage Penalty Relief

B Expansion of the 15 Percent Rate Bracket for Married Couples Filing Joint Returns

C Marriage Penalty Relief and Simplification Relating to the Earned Income Credit

179 Education Incentives

A Modifications to Education IRAs

B Private Prepaid Tuition Programs; Exclusion from Gross Income of Education Distributions from Qualified Tuition Programs—Section 529 Plans

C Exclusion for Employer-Provided Educational Assistance

D Modifications to Student Loan Interest Deduction

E Eliminate Tax on Awards Under the National Health Service Corps Scholarship Program and the F. Edward Hebert Armed Forces Health Professions Scholarship and Financial Assistance Program

F Deduction for Qualified Higher Education Expenses

180 Pension and Individual RetirementArrangement Provisions

181 AMT Relief

182 Health Insurance for Self-Employed

183 Income Tax Treatment of Certain Restitution Payments to Holocaust Victims

184 Estate, Gift, and Generation-Skipping Transfer Tax Provisions

A Phase-out and Repeal of Estate and Generation-Skipping Transfer Taxes; Increase in Gift Tax Unified Credit Effective Exemption

B Expand Estate Tax Rule for Conservation Easements

C Modify Generation-Skipping Transfer Tax Rules

D Availability of Installment Payment Relief

185 Sunset

CHAPTER 13 The Job Creation and Worker Assistance Act of 2002

186 Bonus Depreciation

187 Net Operating Losses

188 Classroom Materials

189 Electric Vehicle Credit

190 Work Opportunity Tax Credit

191 Welfare to Work Tax Credit

192 Archer Medical Savings Account

193 Liberty Zone Benefits

CHAPTER 14 The Tax Relief Reconciliation Act of 2003

A Rate Reductions

B The Marriage Penalty

C The Alternative Minimum Tax

D Child Tax Credit

E Dividends/Capital Gains

F Deduct Your SUV—Election to Expense

CHAPTER 15 Income Averaging and Hurricane Tax Breaks

CHAPTER 16 2006 Tax Reform

A The Tax Increase Prevention and Reconciliation Act of 2005

B The Pension Protection Act of 2006

C Tax Relief and Health Care Act of 2006

CHAPTER 17 Tax Reform, 2007–2008

A The Mortgage Forgiveness Debt Relief Act of 2007

B The New Debt Relief Act

C The Economic Stimulus Act of 2008

D The Heroes Earnings Assistance and Relief Act of 2008

E The Housing and Economic Recovery Act of 2008

CHAPTER 18 2009 Tax Changes

194 “Making Work Pay” Tax CreditThis provision of the American Recovery and Reinvestment

195 Reducing the COBRA Bite

196 First-Time Home Buyer Credit Expanded

197 American Opportunity Tax Credit

198 Energy Credits

199 Plug-in Electric Drive Vehicle Credit (Sec. 1141)

200 Plug-in Electric Vehicle Credit (Sec. 1142)

201 Conversion Kits (Sec. 1143)

202 Treatment of Alternative Motor Vehicle Credit as a Personal Credit Allowed against AMT (Sec. 1144)

203 AMT Patch

204 Earned Income Credit

205 Child Tax Credit

206 Section 529 Plans

207 Unemployment Benefits

208 Qualified Transportation Benefits

209 Estimated Taxes

210 Motor Vehicle Sales Tax

211 Business Depreciation

212 NOL Carrybacks

CHAPTER 19 More Tax Changes

A The Hiring Incentives to Restore Employment (HIRE) Act of 2010

B The Patient Protection and Affordable Care Act

C Small Business Jobs Act of 2010

D The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010

CHAPTER 20 How to Avoid/Survivean IRS Audit

Appendix A Cost Recovery/Depreciation

Appendix B Business Use of “Listed Property”

Appendix C Auto Leases

Index