Re: H&R Block: How Does It Get Around Pub 1345, Page 44 Rules?

I've been saving thousands of dollars in taxes every year for nearly 2 decade by investing in low-income housing, for which there's a tax credit. I invested $20K in an LP in 1991, and at its peak it was generating $3K/year in credits.

Rich people also tend to have lots of investments, some of which are likely to have losses, which they can sell to offset gains. Not technically a "loophole", but it's a way to reduce taxes that's more available to rich people than poor people.

Admittedly, the AMT has mitigated many of the loopholes that rich people traditionally took advantage of.

Ah, I thought you and Anne would add something new I didn't know. Maybe someone else will.

ChEAR$$$, Harlan Lunsford, EA n LA

Not if there is an itemized deduction limitation or high-balance limitation.

(Don't forget to add "houseboat" to your list of possible second homes...)

Tax free federal, or state? What is the reduction in interest rate due to no taxation?

Subject to high-balance limitations.

For an employee? Limitations. For a self-employed person? Expect some scrutiny. Scratch that, expect some scrutiny in either case.

-Mark Bole

A wonderful example occurred today that illustrates that so called tax loopholes aren't just for the wealthy.

A client today wound up owing federal 658$. Wow, what a shock (caused by inadvertant erroneous witholding,but that's another story and problem).

So I suggested possibility of contributing to an IRA before April 15th and illustrated just how much was the optimum amount in their (joint) particular case. With an IRA contribution of exactly 2700$, their balance due of 758$ turned into a refund of 670$, what with the combination of tax deductibility of the 2700, the lessening of social security subject to tax and the maximum possible retirement income credit. The latter was 963$ and this was FREE money! And since she is

58 years old now, she can withdraw the 2700 two years from now and not pay any penalty! Tax yes; penalty no.

And of course their was a Georgia income tax savings of another $ 162 for a total take of 1,590$ based on 2,700$ into an IRA.

This just sort of made my day.

ChEAr$$$$, Harlan Lunsford, EA n LA

Such as deductible IRA contributions.

But making up a deduction can still help; the limitation on Itemized Deductions, for instance, depends only on income, so an additional $1,000 deduction still reduces taxable income by $1,000 (providing AMT doesn't apply, or the deduction is still available under AMT).

Seth