Living the Tax-Free Life


As the 2012 election draws near, politicians and pundits are weighing in on Republican nominee Mitt Romney’s personal taxes. Will he release any of his returns for years prior to 2010? Did he really not pay any tax at all in some of those years? Is there something in those returns that he fears might jeopardize his campaign?

If people are interested in a presidential candidate’s tax return, they may also be interested in their tax returns after they’ve won the office. While the President’s $400,000 annual salary is not tax free, he does enjoy tax–free benefits that would make most corporate CEOs envious.

For starters, there’s the 55,000 square–foot house on 18 acres of prime Washington real estate that estimates would rent for $1,752,296 per month (the tax alone on the value of that rent is $7.36 million per year). There’s also a rustic cottage just outside DC, staffed by the U.S. Navy and Marine Corps, that he uses as a vacation retreat.

Next, there’s security. Plenty of CEOs and celebrities hire bodyguards to ward off real or imagined threats, and the security may actually be tax–deductible. But the President’s Secret Service protection is tax–free, and his guards are the best of the best. While the exact value of the President’s protection is a closely–guarded secret, the House of Representatives voted for $113 million in funding to protect the 2012 presidential candidates and cover “protective activities” related to the campaign.

Those who travel often will probably agree that the President’s most valuable perk is the privilege to fly without the usual TSA hassles – or FAA taxes and fees. The President enjoys two fully–loaded 747-200Bs, both equipped with an executive stateroom, office, conference room, and state–of–the–art navigation and communications systems that let him conduct business in the air, even if the country is under attack. Corporate jets typically carry a dozen passengers and cost $3,000 to $6,000 per hour to operate, while Air Force One carries 102 passengers and crew and costs a whopping $181,000 per hour.

Most of us would agree that any President earns every dime we pay him, whether that income takes the form of taxable salary or tax–free benefits. But you don’t have to be President of the United States to enjoy certain tax–free benefits – there may be deductions or credits that can help maximize your financial health – and if you do, make sure you understand how to correctly report them on your tax return!