21 Ways of Tax-Less-Ness

It may be the day after Christmas, but the holiday spirit is still going strong! So why not a play on the 12 Days of Christmas, this time with gifts that everyone likes, less taxes! So in the spirit of the “12 Days of Christmas,” let’s explore the “21 Ways of Tax-less-ness” that might surprise you at tax time.
Following are 21 Ways to enjoy Tax-Less-Ness. Of course, there are always exceptions to everything, but here are 21 things on which Americans DON’T usually have to pay tax:

1. Withdrawals of Roth Contribution Money: Earnings are exempt under additional rules, but rejoice that when you withdraw your contributions, they are not taxed.
2. Minister’s Housing Allowance: It’s a blessing for clergy members that the housing allowance itself is not federally taxable. However, it is subject to self-employment tax.
3. Combat Pay, VA Benefits, and Service-Related Disability: As a salute to our heroes, enjoy tax exemptions for your dedicated service and sacrifices.
4. Peace Corps Living Allowance: Recognizing the altruistic spirit, the Grinch’s heart has grown 3 times larger for this tax savings.
5. Long-Term Care Insurance Payments: Perhaps this tax-free payment dovetails the “healthy” and “prosperous” new year wishes.
6. Worker’s Compensation: For the elves who get injured on the job, this compensation is hands-off from the taxing federal government.
7. Wrongful Imprisonment: Here’s an offer of solace as an exemption during times of injustice.
8. State-Funded In-Home & Foster Care Payments under difficulty of care rule: A life-line of support for care-givers who are extending a helping hand to children.
9. Property Settlements in Divorce, including cash: Providing a reprieve from taxes during a challenging time.
10. Child Support: Acknowledging the importance of providing for children without tax consequences.
11. Alimony Received for Divorce after 2018: A tax-free gift of comfort and joy.
12. Scholarships for Degree Candidates: A gift of knowledge, exempt from taxes for tuition, fees, books & supplies.
13. Life Insurance Proceeds and Accelerated Death Benefits: Providing financial comfort without tax obligations.
14. Inheritances: A legacy gift without taxing beneficiaries.
15. Gifts & Rebates: It’s like a cheerful surprise under the Christmas tree!
16. Qualified Employer-Provided Fringe Benefits: Including health insurance, it’s a tax-free perk from your employer.
17. Municipal Bond Interest Income: Supporting local government without taxing the bondholders.
18. Personal Injury Lawsuit Settlements: Providing a glimmer of hope without further financial implications.
19. Disaster Relief: Extending a helping hand in times of need without taxing those in distress.
20. Disability and Worker’s Compensation: Ensuring well-being over…well, taxing.
21. Up to $500,000 Profit from the Sale of your Personal Residence: Celebrate homeownership and new beginnings without capital gains.

These 21 Ways of Tax-Less-Ness might not fit neatly into a partridge in a pear tree, but you will join the 10 lords a leaping when you recognize that the federal tax system actually tries to show some love. Remember, while the aforementioned generally avoid federal income tax, exceptions may apply.

As you navigate the upcoming tax season, consider these exemptions as a reminder that even in the realm of taxes, there can be moments of prosperity in the new year. Wishing you a healthy new year and a less taxing and more prosperous tax season!

To ensure your own tax-less-ness opportunities, let Saunders Tax & Accounting help you. We are currently open Monday through Thursday from 9 am to 5 pm and available online at www.SaundersTax.com. For our extended hours during tax season, click HERE. Awarded the Hagerstown Chamber of Commerce “2023 Small Business of the Year”, we have been providing a Less Taxing Life and More Prosperous Solutions since 1984!