More On Tax Planningfrom The Advisor's Professional Library
- Selected Provisions of the American Taxpayer Relief Act of 2012 The experts of Tax Facts have produced this comprehensive analysis of selected provisions of the American Taxpayer Relief Act of 2012 (the Act) to provide the most up-to-date information to our subscribers. This supplement analyzes important changes to the tax code with emphasis on how these developments impact Tax Facts’ major areas of focus: Employee Benefits, Insurance, and Investments.
- Annuities: Estate Tax The value of certain types of annuities may be included in an estate’s value. Understanding the intricacies of these inclusions is a critically important aspect of estate planning.
The number of high-earning U.S. taxpayers who did not owe income tax in 2008 shot up by nearly 80% from the previous year, according to the spring 2011 edition of the Statistics of Income (SOI) Bulletin, released June 14 by the IRS.
The latest edition of the bulletin shows that taxpayers with adjusted gross incomes (AGI) of $200,000 or more filed nearly 4.4 million returns in 2008, 3.1% of total returns filed. Of those, 18,783 filers (0.4% of the high-income total) avoided paying U.S. income taxes by using legal deductions, credits and exemptions, compared with 10,465 (0.2%) who owed no tax in 2007.
A further 10,824 owed no worldwide income tax in 2008, up from 4,841 a year earlier.
These totals and percentages are the highest recorded by the bulletin whose data go back to1977. That year, 60 taxpayers (0.1%) with AGI of $200,000 or more paid no U.S. income taxes.
The bulletin also showed that another group of high-income taxpayers, “nearly nontaxables,” was able to offset a significant portion of its income before being subject to tax. These high expanded-income taxpayers (determined by items reported on tax returns that provide a more comprehensive measure of income than AGI) pay income tax equal to only a small share of his or her income.
In 2008, around 0.9% of high expanded-income taxpayers who reported at least some worldwide tax liability were able to reduce their adjustable taxable income to less than 25% of their expanded income.