Middle Income Tax Shelters

[kst$]

Well they are not really tax shelters like they have for the rich but Expenditures for the middle class.

• Special exclusions, exemptions and deductions. These reduce taxable income and result in a smaller tax bills. Examples are tax-exempt municipal bond interest, the exclusion of employee discounts from taxable income, and dependent-care assistance programs.

• Preferential rates. These reduce tax bills by applying lower rates to all or part of your income. Congress gave taxpayers a big one in 2003: the new special maximum tax rate on long-term capital gains or on qualified dividends. (It’s 5% for taxpayers in the 15% bracket or lower; 15% for everyone else.) While the dividend and capital gains breaks are available to all, it is true that higher-end taxpayers will derive more benefit than anyone else. The Citizens for Tax Justice estimates that more than half of the benefits will go to taxpayers with incomes above $145,000.

• Special credits. These are subtracted from your tax bill, rather than from the income on which your taxes are figured. For example, the child tax credit or the foreign tax credit.

• Tax deferrals. Deferrals let you pay later rather than now. These deferrals really constitute interest-free loans from the IRS. The best-known deferrals today are the contributions we make to Individual Retirement Accounts, 401(k) accounts or similar retirement funds.

10 big tax breaks for the rest of us

by Jeff Schnepper

This still only applies to a certain group with in the middle class. Hopefully this will mean you and me.

[moneysense]

There seems to be options for the rich and the middle income tax payers, but what about the lower income people. Or for that matter, the self employed?

There doesnt seem to be any options for the lower income people, and they are the ones that really need the tax breaks as just making it from day to day is rough enough.

Do you have any information on this situation? If you can find any information, would you please post it?

[udontknow]

I'd like to share this link to long term care insurance tax deductions

[moneysense]

Thanks for sharing the link with us. Long term care is something we all will eventually need and it is good to know that there are tax breaks out there when this does happen.