J.K. Lasser's 1001 Deductions and Tax Breaks 2013: Your Complete Guide to Everything Deductible

APPENDIX B

Checklist of Tax-Free Items

Alert

At the time this book was printed, Congress had not extended numerous breaks for 2012 that had expired at the end of 2011. Check the online supplement in February 2013 at www.jklasser.com or www.barbaraweltman.com to see whether these breaks apply for 2012 returns.

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 2012 tax returns. Items with an asterisk (*) expired or were changed at the end of 2011 but could be extended at 2011 amounts for 2012.

• 529 plan withdrawals to pay qualified higher education costs
• Accelerated death benefits under a life insurance policy
• Adoption costs paid by employer up to $12,650
• Awards to certain employees (usually up to $1,600)
• 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
• 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
• Discounts on purchases you make
• Dividends for those ...