October 2012
Beginner
784 pages
45h 24m
English
Content preview from J.K. Lasser's Your Income Tax 2013: For Preparing Your 2012 Tax Return
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28.1 Tax-Saving Opportunities
The table below highlights some of the tax-saving opportunities discussed in this book.
Table 28-1 Tax-Saving Opportunities
| Objective— | Explanation— |
| Realizing long-term capital gains | Long-term capital gains are taxed at lower rates than short-term gains and regular income. See Chapter 5 for basic capital gain rules. See Chapters 30 and 31 for discussions of special investment situations. |
| Earn qualifying dividends | Through 2012, qualified dividends (4.2) are subject to the reduced tax rates for long-term capital gains. |
| Earning tax-free income | You can earn tax-free income by—
1. Investing in tax-exempt securities. However, before you invest, determine whether the tax-free return will exceed the after-tax return of taxed income (30.12).
2. Taking a position in a company that pays tax-free fringe benefits, such as health and life insurance protection. For a complete discussion of tax-free fringe benefits, see Chapter 3.
3. Seeking tax-free education benefits with scholarship arrangements, qualified tuition programs and Coverdell ESAs; see Chapter 33.
4. Taking a position overseas to earn excludable foreign earned income; see Chapter 36.
5. Investing in Roth IRAs; see Chapter 8.
|
| Deferring income | You can defer income to years when you will pay less tax through—
1. Deferred pay plans, which are discussed in Chapter 2.
2. Qualified retirement plans such as 401(k) plans (Chapter 7), Keogh plans (Chapter 41), and traditional IRA and Roth ... |
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