Earned Income Tax Credit (EITC) Information

How to Pay Zero Taxes by Jeff A. Schnepper

Fully updated to include all the latest tax law changes, How to Pay Zero Taxes outlines the easiest, most practical strategies you can use to lower your taxes this year, next year, and beyond. From converting personal expenses into business expenses to avoiding or surviving an IRS audit, Jeff Schnepper's guide comprehensively covers more deductions than any other tax book, all conveniently organized in six fast-access categories: exclusions, credits, “above-the-line” deductions, “below-the-line” deductions, traditional tax shelters, and supertax shelters.

Jeff A. Schnepper is the author of several books on finance and taxation, including How to Pay Zero Estate Taxes and all twenty-four previous editions of How to Pay Zero Taxes. He is a financial, tax, and legal advisor to the Transamerica sales force and runs a full-time accounting and legal practice in Cherry Hill, New Jersey. Mr. Schnepper is Microsoft's MSN MONEY tax expert, an economics editor for USA Today and is tax counsel for Haran, Watson & Company.

     

Earned Income Tax Credit (EITC) Information - Coverdale IRAs

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Earned Income Tax Credit (EITC) Information * Coverdale IRAs

Tax Treatment for Coverdale IRAs   
Tony Novak

A number of publications, including my own, have mistakenly reported over the past year that Coverdale IRAs, formerly known as Education IRAs, are tax deductible.

Coverdale IRAs are not tax-deductible.

Originally the concept of education IRAs was meant to provide a tax-deductible benefit that would defer taxes on contributions until the time of withdrawal, but the accounts were limited in size to only $500 per year. Due to the small allowable account size, these Education IRAs were not very popular with savers of financial institutions. Then in 2001 the amount of the allowable contribution was increased to $2,000 for individuals with an income up to $95,000 or couples filing jointly with an income up to $190,000. But the contribution is not deductible from taxable income for federal income tax purposes in the same manner as a traditional IRA account.

Article to continue below----------------------------------------------

NARUC Asks For Clarification On Broadband Grant Tax Status (Broadcasting And Cable)
Association says money should be tax...

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One possible "work around" to achieve the immediate tax deferral benefit of deductibility is to make a regular tax deductible IRA contribution if you qualify, and then make a penalty-free withdrawal for education purposes in a later year. Education expenses are one of the special IRA withdrawals allowed that are exempt from early withdrawal penalties.


This tax issue aspect is separate and distinct from the issue of tax credits for higher education - known as the lifetime learning credit and the Hope Scholarship credit. The tax credits have their own rules. Also, Section 529 tuition plans offer additional tax deferral alternatives.

Article to continue below----------------------------------------------

Tax Tips For The Unemployed (CNN Money)
Tax time can be a painful time for many of us, and it's especially tough for people without jobs. If you're unemployed, there are a few twists and turns in the tax code that can work to your benefit.
U.S. Sales Tax Rates Hit Record High (Forbes)
Shopping blues: Top tax 12%. Chicago's 10.25% highest big-city rate. More Internet tax fights loom.

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One common theme in all of these plans is that upper income taxpayers cannot effectively use these tools to reduce their current tax bill. These built-in income limitations plus the effect of alternative minimum tax rules make these tools ineffective for current-year planning, but can still have a significant tax effect over a longer period of time. Upper income taxpayers should consider the use of various types of trust accounts for more effective income tax planning strategies.

For more information on this topic, the IRS has a well-written Publication 970 titled "Tax Benefits for Higher Education. This is available by calling 1-800-TAX-FORM or on the Web at www.irs.gov/pub/irs-pdf/p970.pdf.



About the Author: Tony Novak, MBA, MT, is a financial adviser based in Narberth, Pennsylvania. He is editor/publisher of "Tax and Benefit News" and moderator of the tax forum for financial planners at "Financial Planning Interactive". He is available by telephone at 1-877-529-7435 to address public inquiries on tax and benefit planning issues free of charge through OnlineAdviser service sponsored by www.MedSave.com and www.FreedomBenefits.com.

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Index of Articles about Taxes

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Getting Tax Help From The IRS by Carl LaFresnaye

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The Internal Revenue Service unveiled a special new section for people who have lost their homes due to foreclosure. The IRS also reassured homeowners that, although mortgage workouts and foreclosures...

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After the United States declared its independence and fought the Revolutionary War, the U.S. Congress relied on excise taxes on alcohol, tobacco and a few other products for revenue to pay off its war...

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