| Introduction | p. xix |
| Income Tax on What Your Employer Pays You | p. 1 |
| Fast Forward | p. 2 |
| Cash Compensation--What Is Taxed? | p. 4 |
| Meals and Lodging | p. 5 |
| Health and Accident Plans | p. 6 |
| Medical Insurance | p. 6 |
| Health Maintenance Organizations (HMOs) | p. 7 |
| Medical Savings Account (MSA) | p. 7 |
| Life Insurance | p. 7 |
| Cafeteria Plans | p. 7 |
| Other Fringe Benefits | p. 8 |
| No Additional Cost Service | p. 8 |
| Qualified Employee Discount | p. 8 |
| Working Condition Fringe Benefits | p. 9 |
| Qualified Transportation Fringe | p. 9 |
| De Minimis Fringes | p. 10 |
| Meals at Employer-operated Facilities | p. 10 |
| Employee Achievement Awards | p. 10 |
| Employer-provided Adoption Assistance | p. 10 |
| Educational Assistance Programs Provided by an Employer | p. 10 |
| Tuition Reduction Programs | p. 11 |
| Dependent Care Benefits | p. 11 |
| Valuation of Taxable Fringe Benefits | p. 11 |
| Employer-owned Automobiles | p. 12 |
| Employer-provided Flights | p. 12 |
| Transportation Provided Because of Unsafe Conditions | p. 12 |
| Sorting Out the Numbers on Your W-2 | p. 13 |
| Retirement and More Benefits | p. 17 |
| Fast Forward | p. 18 |
| Retirement and Savings Plans (Set Up and Run by Your Employer) | p. 19 |
| Types of Retirement Plans and Choices You Can Make | p. 19 |
| Annuities | p. 21 |
| What You Need to Do About Your Retirement Plan and Taxes | p. 21 |
| Tax Planning Implications | p. 22 |
| Individual Retirement Account (IRA) | p. 22 |
| Roth IRAs | p. 24 |
| Tax Records You Should Keep | p. 25 |
| Employer Stock and Stock-Option Plans | p. 25 |
| Nonqualified Stock Options | p. 25 |
| Restricted Stock and Stock Options | p. 26 |
| Stock Appreciation Rights (SARs) | p. 27 |
| Tax Records to Keep | p. 27 |
| Tax Planning Implications | p. 27 |
| Nonqualified Benefit Plans | p. 28 |
| Tax Records to Keep | p. 28 |
| Taking Cash Out of Your Retirement Plan | p. 28 |
| Our Favorite Deductions--Travel and Entertainment | p. 31 |
| Fast Forward | p. 32 |
| The Confusion of Terms and What They Usually Mean | p. 33 |
| Travel and Transportation | p. 34 |
| Running (or Driving) Around Town | p. 34 |
| How to Compute the Cost of Business Transportation | p. 36 |
| Travel Out of Town | p. 37 |
| What Does and Does Not Count As Travel? | p. 37 |
| Travel That Is for Both Business and Pleasure | p. 38 |
| Taking Along Your Spouse or Friend | p. 40 |
| Travel As Education | p. 41 |
| Records to Keep | p. 41 |
| What the IRS Allows for Meals, Even If You Don't Keep Expense Records | p. 43 |
| Entertainment Expense | p. 43 |
| Directly-Related-to-Your-Business Test | p. 43 |
| Associated-with-Your-Business Test | p. 44 |
| Lavish Entertaining | p. 45 |
| Conventions As Entertainment | p. 45 |
| Your Spouse (or Significant Other) at an Entertainment Function | p. 45 |
| Percentage Limitation of Entertainment Expense | p. 46 |
| Entertainment Facilities | p. 47 |
| Conclusion | p. 48 |
| More Business Expense and Employer Reimbursement | p. 49 |
| Fast Forward | p. 50 |
| Gifts to Customers | p. 51 |
| Annual Deduction Limit of $25 | p. 51 |
| Trinkets (Specialty Advertising Items) | p. 52 |
| Tickets to Theater or Sporting Events | p. 52 |
| Dues for Memberships: Deductible? | p. 52 |
| Dues for Social Clubs Are Not Deductible | p. 52 |
| Dues That May Be Deductible | p. 53 |
| Uniforms, Tools, and Similar Business Expenses | p. 53 |
| Education | p. 53 |
| What Can You Do to Turn Nondeductible Education into Deductible Education? | p. 54 |
| Moving Expenses | p. 54 |
| Distance Requirement | p. 55 |
| Time Test | p. 55 |
| Moving Costs That Are Deductible | p. 56 |
| Moving Costs That Are Not Deductible | p. 57 |
| Reimbursement of Moving Expenses by Your Employer | p. 58 |
| Searching for Employment? Deduct These Costs | p. 59 |
| Reimbursement of These Expenses | p. 59 |
| Where to Deduct Job-search Expenses | p. 59 |
| Employer Reimbursement of Transportation, Travel, Entertainment, and Gift Expenses | p. 60 |
| How to Avoid This Ridiculous Erosion of Legitimate Business Deductions | p. 61 |
| Where to Find More Details on Entertainment and Business Gifts | p. 64 |
| Conclusion | p. 64 |
| What You Pay Yourself--Income from Your Own Business | p. 65 |
| Fast Forward | p. 66 |
| Organization Forms That Allow You to Hire Yourself | p. 67 |
| Sole Proprietorships, the Easy Way to Go | p. 67 |
| General Partnerships | p. 69 |
| Limited Partnerships | p. 70 |
| Limited Liability Companies | p. 72 |
| Corporations (C and S) | p. 72 |
| Taking Cash Out of Your Business | p. 74 |
| Sole Proprietor | p. 74 |
| Partnerships, Limited Partnerships, and Limited Liability Companies | p. 74 |
| C Corporations | p. 75 |
| S Corporations | p. 75 |
| Withdrawal of Inventory and Other Assets for Personal Use | p. 77 |
| Wages and Salaries to Other Family Members | p. 78 |
| Health Insurance Coverage by Your Business for Your Family | p. 78 |
| The Tax-Free Room and Board Fringe Benefit | p. 79 |
| Retirement and Savings Plans in General | p. 80 |
| Earned Income Requirement | p. 80 |
| Nondiscrimination Rules | p. 80 |
| Sole Proprietorship | p. 81 |
| General Partnerships | p. 81 |
| Limited Partnerships | p. 81 |
| Limited Liability Companies | p. 81 |
| C Corporations | p. 82 |
| S Corporations | p. 82 |
| Types of Plans | p. 82 |
| Should You Become Self-Employed? | p. 83 |
| Income from Investments in Securities | p. 85 |
| Fast Forward | p. 86 |
| Income from Interest-bearing Investments | p. 87 |
| Accounts in Banks, Credit Unions, Savings and Loan Associations, and Similar Institutions | p. 87 |
| Interest from Bonds Issued by Governments | p. 87 |
| Bonds Issued by Corporations | p. 92 |
| Complicated Interest Tax Calculations | p. 92 |
| Dividend Income | p. 97 |
| Dividends from Regular Corporations | p. 97 |
| Mutual Funds (Registered Investment Companies or RICs) | p. 98 |
| Real Estate Investment Trusts (REITs) | p. 98 |
| Other Dividends | p. 98 |
| Income Tax When You Sell Your Securities | p. 99 |
| Fast Forward | p. 100 |
| Gains and Losses When You Sell Securities or They Mature | p. 101 |
| Gain or Loss? | p. 102 |
| Gain on Sale of a Security Before May 7, 1997 | p. 102 |
| Gain on Sale of a Security After May 6, 1997 | p. 103 |
| Losses on Sales of Securities | p. 104 |
| Loss When Stock or Bond Becomes Worthless | p. 105 |
| Selling Bonds Can Bring Added Complications | p. 106 |
| Dividends That Affect Basis, Gain, and Loss | p. 108 |
| Other Securities (Derivatives) | p. 109 |
| Tax Planning for Your Investments in Securities | p. 109 |
| Tax on Income from Real Estate Investments | p. 113 |
| Fast Forward | p. 114 |
| Income from Rental Real Estate | p. 115 |
| Noncash Rental Income | p. 115 |
| Renting to Related Entities | p. 115 |
| Expenses That Are Deductible from Rental Income | p. 115 |
| Depreciation of Rental Property | p. 117 |
| Net Income or Loss from Rental Property | p. 119 |
| Gain or Loss When You Sell Rental Real Estate or Real Estate Used in Your Business | p. 120 |
| Income from Renting All or Part of Your Residence(s) | p. 123 |
| Gain or Loss When You Sell Your Principal Residence | p. 129 |
| Royalty Income | p. 133 |
| Royalty Income from the Extraction/Cutting of Resources | p. 133 |
| Royalty Income from Copyrights, Patents, and Other Intangibles | p. 134 |
| Retirement and Other Withdrawals from Retirement Funds | p. 137 |
| Fast Forward | p. 138 |
| Taking Money Out of Your Retirement Plan | p. 139 |
| General Rules About Plan Distributions | p. 139 |
| Exceptions to the Age 59 1/2 Rule | p. 140 |
| Withdrawals Starting At Age 70 1/2 Rule | p. 143 |
| Lump Sum Payments from Retirement Plans | p. 143 |
| Social Security | p. 145 |
| How Much of Your Social Security Will Be Taxable? | p. 146 |
| Tax on Part-time Employment After You Retire | p. 146 |
| Conclusion | p. 148 |
| Personal Expenses You Can Deduct (Itemized Deductions) | p. 149 |
| Fast Forward | p. 150 |
| Medical Expense | p. 151 |
| Hospitalization Expense | p. 151 |
| Long-term Care Facilities | p. 152 |
| Accident and Health Insurance | p. 152 |
| Expenditures for Medical Equipment or Improvements | p. 152 |
| Transportation and Travel as a Deductible Medical Expense | p. 153 |
| Payment and Insurance Reimbursement | p. 153 |
| Where to Deduct | p. 154 |
| Taxes You Can Deduct as Itemized Deductions | p. 154 |
| Taxes That Are Deductible as Taxes | p. 154 |
| Interest Expense | p. 156 |
| Home Mortgage Interest | p. 156 |
| Investment Interest | p. 157 |
| Charitable Contributions | p. 157 |
| Is the Charity Qualified? | p. 157 |
| How Much Can You Contribute? | p. 158 |
| Be Sure You Can Prove You Made the Contribution | p. 158 |
| Casualty Losses | p. 160 |
| Amount of Loss | p. 160 |
| Insurance Proceeds | p. 162 |
| Disaster Losses | p. 162 |
| Theft Losses | p. 162 |
| Casualty, Theft, and Disaster Losses to Business Property | p. 162 |
| How to Report Losses on Your Tax Return | p. 163 |
| Miscellaneous Itemized Deductions | p. 163 |
| Unreimbursed Employee Expenses | p. 163 |
| Tax Preparation Fees | p. 163 |
| Other Expenses (Miscellaneous Deductions) | p. 164 |
| Conclusion | p. 165 |
| Winding Up--How It All Goes Together in Your Tax Form | p. 167 |
| Fast Forward | p. 168 |
| Personal Exemptions | p. 169 |
| Dependents Defined | p. 170 |
| Your Tax Filing Status | p. 172 |
| Single Individuals | p. 172 |
| Happily Married Individuals | p. 173 |
| Unhappily Married Individuals | p. 174 |
| How It All Goes Together in Your Tax Return | p. 174 |
| Add Up Your Income from All Taxable Sources | p. 174 |
| Compute How Much of Your Social Security Benefit Is Taxable | p. 175 |
| Make Adjustments to That Total Income | p. 175 |
| Adjusted Gross Income | p. 175 |
| Subtract Personal Exemptions | p. 176 |
| Subtract Itemized Deductions | p. 176 |
| Taxable Income | p. 176 |
| Deduct Nonrefundable Credits | p. 176 |
| Tax After Application of Credits | p. 176 |
| Add Other Taxes | p. 176 |
| Subtract Refundable Credits and Payments | p. 177 |
| Net Operating Loss (NOL) | p. 177 |
| Tax Credits in General | p. 179 |
| Child and Dependent Care Credit | p. 179 |
| The Dependent(s) Must Be | p. 179 |
| The Care Expenses Must Be Employment-related | p. 179 |
| Amount of Credit | p. 179 |
| Expenses That Qualify | p. 180 |
| Child Credit | p. 181 |
| Adoption Expense Credit | p. 181 |
| Credit for the Elderly or the Disabled | p. 182 |
| Who Is Eligible | p. 182 |
| Income Limits | p. 182 |
| Education Credits | p. 182 |
| Phaseout of Credits | p. 183 |
| Eligible Student (for Either Credit) | p. 183 |
| Eligible Expenses | p. 183 |
| Eligible Educational Institution | p. 183 |
| Hope Scholarship Credit | p. 184 |
| Lifetime Learning Credit | p. 184 |
| Alternative Minimum Tax | p. 184 |
| Nanny Tax (Domestic Service Employment Tax) | p. 186 |
| Covered Employees | p. 186 |
| Rate of Tax | p. 186 |
| How to Stay Legal | p. 187 |
| Excess Social Security Withheld | p. 187 |
| Kiddie Tax | p. 187 |
| Child's Income Subject to Alternative Minimum Tax (AMT) | p. 188 |
| Conclusion | p. 189 |
| Helpful Information | p. 191 |
| Fast Forward | p. 192 |
| More Printed Help | p. 193 |
| Tax Preparation Software | p. 193 |
| How to Choose the Software You Need | p. 193 |
| Choosing a Tax Professional | p. 195 |
| Commercial Tax Preparers | p. 195 |
| Enrolled Agent (EA) | p. 195 |
| Certified Public Accountant (CPA) | p. 195 |
| Tax Attorneys | p. 196 |
| Conclusion | p. 196 |
| Index | p. 197 |
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