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

APPENDIX B Checklist of Tax-Free Items

Alert

At the time this book was completed, Congress was considering important tax changes that could affect 2017 tax returns and planning for 2018. Check the online Supplement in February 2018 at www.jklasser.com or www.barbaraweltman.com to see what changes have been enacted and when they are effective.

When items are not included in income, and in some cases not even reported on the return, there are considerable tax savings. Here is a list of tax-free items for 2017 tax returns.

• 529 plan withdrawals to pay qualified higher education costs

• ABLE account withdrawals to cover qualified expenses for a disabled beneficiary

• Accelerated death benefits under a life insurance policy

• Adoption costs paid by employer up to $13,540

• Awards to certain employees (usually up to $1,600)

• Bequests

• Black lung benefit payments

• Capital gains and capital gain distributions for those in the 10% or 15% tax bracket

• Charitable transfers of IRA distributions up to $100,000 by those age 70½ and older

• Child support payments

• Coverdell education savings account withdrawals to pay education costs

• Crime victim payments from a state fund for this purpose

• Damages received for personal physical injury

• Damages received for wrongful incarceration

• Debt discharged during insolvency or bankruptcy

• Dependent care expenses paid by employer up to $5,000

• Disability payments under a policy in which you paid the premiums

• Disaster relief payments and disaster mitigation grants ...