IRS-Proof Your Life 100% Legal Tax Secrets For Keeping Uncle Sam’s Hands off Your Money

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The IRS currently receives about $3.3 trillion in tax revenue each year.

But there is a dirty, not-so-little, secret they don’t want you to know about.

According to the Congressional Budget Office’s (CBO) own projections, between now and 2021 the IRS is going to raise another $9.5 trillion from individual income taxes.

That’s the equivalent of an extra $81,557 per U.S. household.

It doesn’t take a rocket scientist to figure out whose door Uncle Sam will come knocking on to cover way more than their fair share of this extra $9.5 trillion.

Yours. But don’t worry. We have an escape plan for you.

We combed through all 74,608 pages of the U.S. tax code. We consulted the top experts in the country.

And from these efforts we created this report.

Within minutes, you’ll be able to apply many of the tips and strategies revealed in this simple-to-follow blueprint towards saving tens of thousands of dollars a year in taxes.

Tax-Saving Strategy No. 1:
Set Yourself Up for a Big Windfall Through a Roth IRA

In 1997, Congress passed the Taxpayer’s Relief Act, which offered Americans the best deal to date to save for retirement and estate planning. It’s called a Roth Individual Retirement Account (IRA) and it’s become so popular that assets have grown from about $57 billion at inception to more than $660 billion today.

Unlike traditional IRAs, which are funded with pre-tax dollars and whose withdrawals are taxable, Roth IRAs are attractive because you fund them with after-tax dollars and get what they earn tax free. Yep, you heard that right – tax free.

This can make a huge difference on your retirement income. For an example, let’s take an imaginary trip back to 1997 when Roth IRAs first became available – the same year, coincidentally, that marked Steve Job’s return to Apple.

An investment opportunity? you ask yourself. Heck, why not, and you and your spouse each open a Roth IRA and make the then maximum allowable $2,000 after-tax contribution by buying Apple stock – 240 shares total for the two of you at $16.50 a share – and decide to wait it out.

Three years later there’s a 2:1 split and you now have 480 shares worth $22,502. Five years later there’s another 2:1 split and your now 690 shares have given you $40,003 – all on paper, of course. Then on June 9, 2014, Apple announces an unbelievable 7:1 split after its price reaches an all-time high of $705 a share.

At the end of the day you’re looking at 6,720 shares with a nest egg of $624,489 – all tax free. If you were still hanging on to them today, you’d have more than $840,000, and that doesn’t even count the quarterly dividends that Apple started paying to shareholders in 2012. That’s pretty impressive for a $2,000 investment.

Okay, so it’s a pie-in-the-sky example, but it’s still representative of how far you can go by investing in a Roth IRA. That makes a Roth IRA sound like the way to go, the proverbial no-brainer – right?

Well, maybe, for some people. Congress doesn’t want to make it too easy for too many people to get too rich and not pay taxes. The people who write the tax laws have laid down stringent requirements for eligibility, and income limits and investment options can change every year.

While you might think the law was set up to benefit the rich, they need not apply. Roth IRAs were actually set up as a boon for the middle class. For 2016, single filers with a modified adjusted gross income (MAGI) up to $117,000 annually can make the maximum contribution of $5,500.

Modified means some deductions are actually added back in as income, which gets us to the caveat: it can get complicated. Over this income, the eligible contribution starts to slide until MAGI reaches $132,000. That’s when the maximum contribution bottoms out at zero.

Married couples filing jointly, meanwhile, can make the maximum contribution up to a modified adjusted gross income of $184,000. Eligible contributions slide until they bottom out at a MAGI of $194,000. Finally, individuals age 50 and older can contribute an additional $1,000 as long as the income rules apply.

A Roth IRA is intended to be long-term investment strategy, though there is no age cap on making the investment. This differs from traditional IRA investments, which are cut off at age 70 ½. And, unlike a traditional IRA, there are no rules governing withdrawals. To find out more about Roth IRAs and whether you’re eligible, talk to your financial advisor or go online to http://www.rothira.com.

Tax-Saving Strategy No. 2:
Avoid Paying Tax Twice on Your Investment Earnings

We agree, keeping paper records is a pain. Even more so is keeping a paper trail of every little dividend you reinvest from this fund or that stock. In the long run, however, it pays off because you’ll be on top of one of the most common slip-ups people make – paying taxes twice on your investment dividends.

Here’s how that happens…

Let’s say you’ve invested $10,000 in a company that offers a 2% annual dividend yield that’s automatically reinvested in additional shares. When tax time comes, you have to fork out tax on the $200 dividend you earned on your investment. And you will do so again next year and the year after.

Now, let’s say that after three years you don’t see this stock getting much higher and you decide to take your gain and move on to something else. When you go to sell, you get a buyback of $16,600. That’s more than a 50% profit – not bad after just a few years – and Uncle Sam wants his share.

The IRS, and typically your tax accountant, look at your $10,000 initial investment, your $16,600 buy back, and see a $6,600 capital gain. Only there’s a hitch: You’ve already paid tax on the three $200 dividend payouts your investment gave you, so you really only have to pay tax on a $6,000 gain. If you simply report the original $10,000 investment, you’d end up paying tax on the $600 in dividends twice.

So, how do you ensure that $600 stays off the taxman’s table? By keeping a record of your yearly dividends on each investment you have. We know, what a pain. But keep in mind that in this case, keeping a paper trail really is worth more than the paper it’s printed on!

Tax-Saving Strategy No. 3:
Get a $1,000 Tax Reduction for Each Child Dependent – It Could Cut Your Taxes in Half

It costs dearly to raise a child – nearly a quarter million dollars to the age of 18, and that does not include the cost of college or the possibility that one (or all) of your kids might move back in with you when they get out. However, you can reclaim some of your “investment” in them by making sure to claim all your dependents – and that can even include grandchildren – on your income tax and taking advantage of the IRS’s Child Tax Credit.

Under this provision, all children 17 and under who live under

your roof are worth an extra $1,000 over and above the traditional exemption a dependent entitles you to. In fact, it’s even better than

the exemption because the Child Tax Credit reduces your tax liability dollar for dollar. This means that if you have three kids and you owe Uncle Sam $7,400 at the end of the year, you can subtract $3,000 and write him a check for $4,400. That practically cuts your federal taxes

in half!

In addition to children and grandchildren, you can claim Child Tax Credit for great-grandchildren, adopted children, foster children who have been officially authorized to be in your care, step children, and even step siblings and half siblings. The only thing you have to prove is that these minors are U.S. citizens (via a tax number), that they live with you more than half the year (that’s at least 183 days), and that you are providing at least 50 percent of their support.

As you might guess, certain restrictions do apply. A full Child Tax Credit applies only to couples filing jointly that earn under $110,000 (or $55,000 each if filing separately), and to singles earning under $75,000. For each $1,000 you are over the limit, your Child Tax Credit is reduced by $50. That’s total, not per child. For example, if you have three qualifying children and you and your spouse earn a combined $130,000, your tax credit would be reduced by $1,000 – $50 for every thousand over the $110,000 limit.

The IRS also draws the line on rewarding you for taking too many children under your wing, by making sure the Child Tax Credit cannot be larger than your tax liability. For example, if you have seven qualifying kids and your tax liability is only $5,600, you’d only qualify for $5,600 in Child Tax Credits. The line is drawn at zero. An exception to this rule can apply to low-wage earners, and is called Additional Child Tax Credit. As always, we recommend you consult a tax professional for advice on your own individual situation.

Tax-Saving Strategy No. 4:
Work from Home and Add an Extra $20,000 in Tax-Free Income

You and your spouse are living the good life. Both professionals, you’re grossing, say, $244,000 in annual income. But the taxes are murder. Last year, after taking exemptions for your four kids and deductions for things such as your mortgage, expenses on your rental home, property taxes, and your generous charitable contributions, you barely got under $200,000 in combined adjusted gross income. The IRS took a whopping 28% – that’s nearly $56,000 of your hard-earned money. Ouch! Is there any way to make this less painful? Well, here’s an option: Why don’t one of you quit your office job and set up shop at home!

It’s something millions of people, both single and married, are doing and for good reason. Year after year, being in business for yourself is your best guarantee to save money on taxes big time. In fact, it is your best opportunity to get your taxes down to a legal minimum. Think about it. There are really only two sets of tax laws in this country: One for the people who own a business and the other for the people who work for them.

As an employee, you are eligible only for the typical tax deductions – interest on your mortgage, property taxes, contributions to a traditional Individual Retirement Account (IRA) or 401(k), charitable contributions, dependents, and maybe some credits for child care.

Now, let’s take a look at your boss. In addition to all the deductions you’re entitled to, small business owners can also deduct their places of business, spouses (by hiring them), cars, medical insurance, utilities, smart phones, dinner parties (make sure to talk a little business), and even their vacations as long as they combine them with business. Of course, everything we’re recommending is legal, but make sure you consult a tax advisor for individual advice.

Then there’s the money you save by having your office only a room or two away from your bed – fuel and wear and tear on your car, or the cost of other modes of transportation; lunch away from home five times a week; much of the costs associated with child and pet day care; the cost of eating out when you come home too tired to cook; the cost of clothes and grooming; and other miscellaneous funds you end up shelling out to maintain home and family life while you’re not there.

One woman we know, who always went to work dressed to the nines, told us working from home saves her $10,000 a year on clothes she no longer needs now that she works at home. And a guy who once commuted daily by train from New Jersey to New York City says he’s saving more than $800 a month in non-deductible expenses (parking lot, train, subway, and lunches) by opting to work out of his home. He now goes into the city to meet clients about once a week, sometimes less, and as he’s self-employed, those same expenses are now deductible.

Experts say you can add as much as $20,000 and even more to your bottom line just by taking your talent home. While this is not possible for everybody, many jobs that were once office-bound can now be performed through telecommuting, which is offering a lot of people the opportunity to try their hand at consulting or being a private contractor, and becoming their own boss. It’s not such as leap of faith as you think. An estimated 37 million Americans now call their home their office, a 20-fold increase in just one decade. This number is estimated to increase by 15% annually.

Tax-Saving Strategy No. 5:
Write Off Losses from Your Home Business and Get a Refund for Taxes Already Paid

Quitting your job to start your own business may sound risky, but statistics show that an estimated 95% of home-based businesses succeed. Most of them even turn a profit in their first year. Should you take a loss, however, the IRS will help you soften the blow. In fact, you can carry back the loss to the income you made when you were fully employed and get money back from the government.

Here’s how it works…

Let’s say Jeff quits his job as a marketing manager to set up his own marketing consulting business, working out of his home. He ends up spending most of the first year and much of his savings generating business. As a result, his business ends up with a net loss of $10,000 in its first year.

At tax time, Jeff can fill out form 8832, called an Entity Classification Election, which will enable him to go back two years and reduce his then $65,000 net income to $55,000. He’ll get a refund check from the federal government (and some states) for the taxes he paid on that $10,000. If the same thing happens in year two, he can once again go back two years and do the same thing. In fact, the IRS allows you to carry over this loss and offset the next 20 years of earnings.

This loophole can be used against any earned wages, including pensions, retirement savings withdrawals, dividends, interest, and even your spouse’s earnings as long as you file jointly. Talk to a tax professional to see if it would work for you.

Tax-Saving Strategy No. 6:
Start a Part-Time Home Business and Pocket $10,000 (or More) Tax Free

Granted, working at home is impossible for a lot of people. Nurses, doctors, waitpersons, actors, retail clerks, chefs, hotel managers, road surveyors – the list just goes on and on. Unfortunately for them, they are missing out on the last great tax dodge.

But guess what? They don’t have to. Anyone, including full-time workers, can set up a business at home and get the same tax advantages as employers, even if their business is part-time. In fact, they can do even better.

As in the example above, if your own business operates at a loss, the IRS allows you to carry back losses against your secure full-time income for two years and carry forward losses for 20 years to come. Here’s how it works…

Let’s say that Mike, a full-time emergency medical technician, has been dreaming of becoming a writer all his life. Instead of spending nights and weekends penning a novel that will never be, he sets himself up as a freelance health writer, pitching story ideas to magazines (and selling some) and making next-to-nothing writing blogs for any variety of insurance dotcoms.

He buys a better computer, a high-speed printer, signs up for a physiology course at a nearby college to improve his medical knowledge, and makes several trips across the country to meet New York editors and interview sources for articles. At the end of the year and after all his hard work, he made $1,200 against $11,200 in expenses. His first-year effort to become a writer results in a $10,000 loss.

His wife feels for him. And so does the IRS. Because Mike earns $80,000 in his day job as an EMT, the IRS gives him a $10,000 grace by treating his income as if he only made $70,000. The rest of his earnings are tax free. Just as in our full-time example, above, the loss can be deducted from all forms of income.

Tax-Saving Strategy No. 7:
Protect Yourself Against the IRS Classifying Your Home Business as a “Hobby”

Starting up your own full or part-time business can be a boon for retirees who want to stay busy. Retirement can actually be an opportunity to dabble in making money doing something you enjoy.

We know a fellow named John who spent all his time when not managing a newspaper business collecting high-end antique furniture, paintings, and silver. When he left corporate life at the full retirement age of 66 he had all the time in the world to pursue his hobby, but nowhere to put the things he wanted to buy. His house was filled with that much stuff!

So he got himself a tax number and starting buying at auctions and flea markets and selling it all on eBay right out of his now-deductible home office and mail room. He upgraded to a brand new station wagon, now deductible, to haul his stuff and started accruing 57.5 cents for every mile he traveled to sales and auctions. He got so busy he hired his 12-year-old son to help him out with packing and shipping after school. This offered him even more potential tax breaks, which we’ll get to later…

He hit it really big not too long ago when a $100 Russian painting he picked at a yard sale sold at a New York auction house for $60,000. Today, two years later, he’s happy as a pig in mud, especially with all the deductions he now has being his own boss. Together with his Social Security and investment income, minus his substantial deductions, he says the money he’s making in his new second career is enough “to give me the life to which I always wanted to be accustomed.”

Anyone has the potential to turn what they love to do into a financially lucrative business, but you have to be careful. You don’t want the IRS to interpret what you’re doing as a hobby, even if in your eyes it’s a bona fide business.

One thing that raises the IRS’s suspicion is getting involved in something that sounds like you’re having fun – like selling antiques. The IRS particularly frowns upon endeavors such as writing (especially being a travel writer), collecting and selling stamps or records, raising show dogs, racing horses, and fixing up and selling old cars (just to point out a few) and prefers to see them as more of a hobby than a business.

To prevent an unwelcome call from an IRS agent, make sure you run your business as a business, with all the proper documentation and paper trails that go along with it. Your tax advisor should be able to help you set that up. It’s also a good idea to strive to make a profit. The IRS is more likely to view what you’re doing as a business, even if it sounds like fun, if you show a profit for at least three out of five consecutive years. For really expensive “hobbies,” like training and racing horses, the IRS gives you more leeway and wants to see a profit for at least two out of seven years. It’s best to see a lawyer or accountant to make sure you get all the facts and set yourself up properly.

Tax-Saving Strategy No. 8:
Call it a Hobby and Write Off Expenses Anyway

Now, let’s say you do like to tinker with old cars and sell them, or even build them and enter them in prize-money races. You make no bones about it: It’s your hobby, and you’re loving it, even if you have to go deep into your pocket to support it. Well, guess what? You can make that splurge of a hobby less painful.

You can deduct some, if not all, the money you shell out to support it. In fact, there’s a tax deduction awaiting you for any hobby that generates income, even something as mundane and universal as growing a vegetable garden. There’s only one stipulation: You can’t deduct more money than you make. That becomes a nondeductible loss.

Let’s say that every summer you hoe the back forty behind your home to plant vegetables. Come August you have tomatoes galore, plus dozens upon dozens of zucchinis, cucumbers, bell peppers, and you name it. You buy dozens of boxes of mason jars and start canning, day and night, for weeks on end. Come September, you don’t know what to do with it all, so you rent a temporary stand at the local farmer’s market and put your vegetables and jarred goods up for sale until they’re all gone.

The IRS – and even you – wouldn’t call it a business, even if you end up making serious money, so you are not entitled to the tax-savings perks of the real farmers who are at the market every day. As a hobbyist, though, you are entitled to make deductions for expenses that are deemed “ordinary and necessary.”

“Necessary” is anything that’s considered common and acceptable for the activity – like buying seedling, a hose to water the plants, and a weed whacker to keep them from strangling. “Ordinary” is something like putting them up in mason jars so they don’t go to waste and hauling them to the farmer’s market for sale.

All you need to do is enter the cost of your hobby under miscellaneous expenses on Schedule A of Form 1040. Be sure to speak with your tax advisor for more details.

Tax-Saving Strategy No. 9:
Set up a Legal Tax Shelter at Your Neighborhood Bank

You probably already have a checking account and a savings account. But did you know there’s a third kind of account you can open, which lets you move money around tax free?

It’s all perfectly legal. It’s called your kid’s account. The strategy of using your children’s accounts is called income shifting or income splitting, and it’s one of the best wealth-building strategies that most people don’t know about.

For an example, let’s go back to John and his new antique collecting business. When he hired his son Todd, that opened the door for John to income shift funds and save thousands of dollars in taxes. Here’s how it works…

The IRS says you can hire your kids from ages 7 to 18 in your self- employed or limited liability business without deducting Social Security and unemployment taxes. Under current regulations, Todd can earn up to $6,300 a year without paying any federal income taxes, though he would have to file a 1040 Form. John can report the wages he paid Todd on Schedule C and take it as a deduction. If you’re in the 28% tax bracket, you’d get $1,764 back in a federal refund, in addition to any state income tax savings.

But the tax savings don’t end there. John could have Todd put the wages in a tax-free college savings plan, which in effect allows him to send Todd to college with tax-free dollars. Or, Todd could invest $5,500 (the maximum annual contribution) in a Roth IRA. John can also still use Todd as a $4,000 dependent tax exemption. He can continue to hire Todd on this basis until he’s 18, at which time Social Security and federal employment taxes would apply.

Again, to save yourself from IRS scrutiny, make sure you’re paying a realistic wage for legitimate hours worked. For example, $20 an hour is hardly an appropriate wage to pay someone to package and mail items, even if they are antiques. Minimum wage is more like it. The IRS might also peg you for an audit just because you have the audacity to hire your pre-teen kid. Be smart and keep appropriate time sheets and details of work performed. Of course, this is all legal, but be sure to consult a tax professional to see whether this tip is applicable to your specific circumstances.

Tax-Saving Strategy No. 10:
Give Your Kid a Mercedes and Get a $1,342 Tax Deduction

This is a smart loophole for people who spend a lot of time on the road. Let’s say you bought a brand new, $53,000 Mercedes and put 120,000 miles on it over the next four years. Let’s also assume that it has depreciated to a net Kelley Blue Book value of $21,000.

The IRS has something called an Annual Lease Value Table, which tells you what it would cost you to lease a car just like this. Now let’s say the lease value for your car is $4,200 for the year. Here’s what you do…

You set up an irrevocable trust for your 12-year-old daughter (it’s a good idea to give the car to someone too young to drive), give the car to the trust, then lease it back. If you’re in the 28% tax bracket, the car would give you a $1,680 tax deduction. Your daughter’s tax on the trust would only come to $338. That gives your family a net savings of $1,342 in the form of an extra deductible.

As always, we recommend consulting a tax professional for advice on your own individual situation.

Tax-Saving Strategy No. 11:
Offset the Cost of College With $2,500 Off Your Tax Burden – per Family Member, per Year

College causes a real pain in the wallet, especially if, like most people, you haven’t planned properly for it. Congress made a provision to make the blow a little softer a few years ago by passing the American Opportunity Credit bill.

The provision enables you to get a tax credit of up to $2,500 for the first four years of undergraduate college for your children, and even you and your spouse. So, if you have triplets in college that means $7,500 will be subtracted from your tax liability for the next four years. Specifically, the law entitles you to a 100% credit for the first $2,000 of tuition and a 25% credit for the next $2,000, for a total of $2,500 per student.

There is, however, a catch. If you and your spouse have a modified adjusted gross income (MAGI) of $160,000 or more, the allowable amount of the credit is gradually reduced up to a MAGI of $180,000, at which point you get zero. If you’re a single parent supporting the triplets, the credit is gradually reduced above a MAGI of $80,000, and reaches zero at a MAGI of $90,000. Also, you or your kids have to take a minimum amount of credits to equal half of a full-time workload.

If your income is too healthy to qualify for the credit, you can allow your children to take the tax credit for themselves. With this tactic, however, you will have to forfeit claiming them as a tax-exempt dependent.

Tax-Saving Strategy No. 12:
Advance Your Own Education and Get a $10,000 Tax Credit

This provision is called the Lifetime Learning Credit, and it allows anyone to take the course or courses of their whim and deduct the cost as a tax credit. Want to improve your golf game? Interested in history? Maybe you’ve always wanted to learn another language. The Lifetime Learning Credit can help.

In fact, this credit is a little broader than that. In addition to tuition, it covers all related expenses, including fees and supplies such as pens and pencils. However, it is less generous than the American Opportunity Credit. Lifetime Learning allows only one credit per year up to $2,000 a year for a lifetime maximum of $10,000.

You can use it to take any course or program offered by an accredited college, or for any course that helps you acquire or improve job skills. So, for example, if your dream is to be a professional photographer, or you want to improve your golf, then go for it and let the IRS help pay the way.

You can take advantage of the Lifetime Learning Credit for any member of your family, including yourself, as long as they are a tax- exempt dependent. It also means you can continue to help one of

the triplets from the previous example pursue a graduate degree,

until he or she is 24 or taps out the $10,000, whichever comes first. You’ll just need to fill out a 1098 T form, which you can get from

the college.

Tax-Saving Strategy No. 13:
Get Your MBA With Help From the Government

Your degree as a chemical engineer has done you well. You’ve accumulated ten patents and some handsome bonuses during the last 20 years. You’re making so much money that you didn’t even qualify for a tax credit when your kids went to college. Nevertheless, a few months ago you decided you wanted to fly on your own and purchased your own chemical engineering firm, naming yourself CEO and giving yourself the generous salary to go with the title.

Now your confidence is waning. As the financial brainiacs around you throw around terms like creative destruction, net net, value chain analysis, and mind-sharing, you realize you need an MBA.

Don’t worry. Because your need for an MBA is to the advantage of your job, you can go for the advanced degree and deduct all the costs, including tuition, fees, books, and travel expenses. The tax laws allow educational expenses as eligible deductions as long as the schooling is required to retain your salary, status, or rate of compensation.

And there are no income limits. It means teachers and nurses, for example, can take deductions for continuing education credits. However, if you’re a history teacher and want to go to school to learn Spanish, well, you might get an argument from the IRS (unless you use the Lifetime Learning Credit – see above).

Tax-Saving Strategy No. 14:
Save Taxes on the Money It Costs to Send Your Kids to College

This strategy is another example of income shifting, but you don’t have to be self-employed to take advantage of it. It’s called gifting and you can do it with any assets – stock, bonds, antiques, valuable collectibles, and real estate – and for any reason. And it works with anyone, not just relatives.

Let’s say you’re coughing up $25,000 a year to send your daughter Beth to college. But it’s really costing you more because you’re paying the tuition in after tax dollars. You need to earn $32,000 to come up with that tuition, because Uncle Sam took $7,000 (at 28%) in federal income tax. However, there is a way to pay that tuition with a smaller tax penalty.

The solution is to gift your child something she can turn around and sell to pay her own tuition, such as stock. There are no income tax consequences for making the gift. Nor is there a tax for receiving one, until you decide to cash it in.

Let’s say the $25,000 in stock you gave Beth started with an initial investment of $10,000. When Beth sells, she’ll have to pay taxes on the $15,000 gain, but at a lower 10% or 15% bracket. Meanwhile, it saves big time on the capital gains you’d have to pay. If you have more than one child in college, you can gift each one in the same way.

Another reason why gifting is a good idea is that, if your child received the same stock as an inheritance, her tax basis would be the full $25,000.

The IRS understands that such things go on, so it has put a limit on how much tax-free gift giving you can do: $14,000 per giftee a year for a single person or $28,000 as a married couple. You are entitled to a lifetime exemption from gift taxes up to $5.43 million. Make sure you talk to your tax advisor to see whether gifting would work for your children’s college tuition.

Tax-Saving Strategy No. 15:
Take a Health Tax Break

If your employer offers you a medical reimbursement account, go for it. It will put extra cash in your pocket. These plans, sometimes called flex plans, divert part of your salary into an account you can tap to pay medical bills. The maximum you can contribute per year is $2,600 and you avoid paying both income and Social Security tax on the money. That saves you 20% to 35% more than if you’d paid for the medical care with out-of-pocket taxable income.

Tax-Saving Strategy No. 16:
Teach Your Dog or Cat to Fetch You a Tax Refund

Ever wonder how that woman across the aisle was allowed to bring a lumbering Old English Sheepdog on board the airplane? She classified him as a service animal. It’s a good bet she’s writing him off as a tax deduction, too, and getting away with it.

Service dogs are no longer relegated to the Seeing Eyes of the blind. The Americans with Disabilities Act entitles anyone with a physical, sensory, psychiatric, or other mental disability to all the amenities of a service animal and there is no saying who qualifies, as you do not need a doctor’s excuse. Who says you require a service dog for your disability is all on the honor system – your word against theirs. Emotional support and therapy dogs, however, do not count as legitimate service dogs, a distinction that becomes important only at tax time.

The IRS allows you to deduct all expenses for your service dog – purchase price, training, feeding, sheltering, boarding, grooming, and even the clothing that big shaggy mess wears when he escorts you on Halloween – over 7.5% of your adjusted gross income. So, if your bottom line income is $82,000 and you can prove Fluffy cost you $7,100 this year (yes, trainer costs and vet bills add up), then you’ll get yourself an extra $1,050 deduction. If you get audited, just don’t make a slip of the tongue by calling Fluffy your pet. Service animals, under the law, are not allowed to be pets (and you wonder why IRS agents have no sense of humor).

There are other ways you can deduct a furry friend from your taxes without going to such an extreme. If you foster an animal or animals for a shelter or rescue organization, all your expenses, including things like leashes and pet toys, are tax deductible. The cost of adoption from a charitable organization counts, too. We recommend consulting a tax professional to make sure whether you and your animal are covered, too.

Guard dogs are deductible as a legitimate business expense (as long as you routinely remember to take them to work), and breeders can deduct all their doggy expenses as long as they can prove they’re doing it as a business, not as a hobby. If you’re lucky enough to have a pet in show business, well, all expenses are allowable “within reason.”

Should you think we’re putting you at risk for even suggesting all this is legal, consider the case of Jan Van Dusen, a self-proclaimed “cat lady” from Oakland, California. She won a judgment in tax court against the IRS a few years ago that allowed her to deduct all her expenses for feeding and taking care of feral cats, which she said she did under the auspices of a charitable organization.

Tax-Saving Strategy No. 17:
Get the IRS to Splurge on Your New Pool

Medical expenses, per se, are not a permissible deduction unless they exceed 7.5% of your adjusted gross income. For a reasonably healthy adult with health insurance it rarely adds up, unless you start thinking out of the box.

For starters, you can deduct medical expenses for all your dependents – spouse, children, parents who live with and depend on you, or any other relative who decides to call your house their home. This not only includes out-of-pocket expenses for doctor’s visits and medication… it also covers your kid’s braces; mom’s periodontal disease; unconventional therapies, including chiropractors, alternative healers; rehab; obesity clinics; and pretty much anyone else who can write you a note saying your treatment is a medical necessity.

Been diagnosed with debilitating arthritis? If the doctor says water therapy is the way to go, the IRS has been known to allow a deductible for the installation of a backyard pool.

And don’t forget travel expenses. You can claim the mileage for traveling to medical services, even if your spouse’s rehab center is 500 miles away and you need to visit him every weekend. This is legal, but make sure you discuss your specific situation with your tax advisor for personalized advice.

Tax-Saving Strategy No. 18:
Have the Taxman Help You Pay for Your Vacation Home

You bought that vacation home in Punta Gorda with the dream that one day you’ll live in it full-time. For now, though, you play the snowbird and spend a few months there in the winter, telecommuting with your office up north. The rest of the time you rent your property out, which only adds to your income and your tax burden. Here are some ways to lighten that tax load.

Let’s say you live in New York City and travel to Florida. Necessary travel to take care of your rental property is deductible. That’s why you have to drive. Each round-trip is worth $1,324 in travel expenses (1,152 miles X 57.5 cents). You take down new sheets and towels (all deductible), because the renters manage to wear them down in a year’s time, plus some more pictures (also deductible) for the still-naked walls.

You need to meet with the rental agent to check on all the leases that are coming up for the year. You also need to check on the property itself for needed repairs. Repairs being the operable word.

There is a big difference between repairs and improvements, at least in the eyes of the IRS. While they are both deductible on a rental property, the deductions are taken in very different ways. For example, let’s say when your get to your place in Punta Gorda you find the place in somewhat of a mess. The paint is peeling on the exterior and the refrigerator has a slow leak, which damaged the floor and walls. When all is said and done, you’ve shelled out $10,000 in repairs – all deductible.

A repair is considered a required necessity to return or maintain the property to its current value. An improvement – say, putting on an addition or installing California closets – is something that increases the value of the property. Improvements costs are deductible, too, but in a different way. They must be amortized over 27 ½ years, meaning your deduction in the year of the cost would only be $364. What would you rather do – get a $10,000 one-time deduction or $364 a year for nearly the next three decades?

All the costs you incur on the days you’re doing business that are related to your rental property are viewed just like any other business trip and are tax deductible. But you must keep detailed records. Spending more than two or three days of work on your rental property during your winter hiatus could raise a red flag. As always, for advice tailored to your specific situation, we recommend consulting a tax professional.

Tax-Saving Strategy No. 19:
Rent Your Home Out for a Week and Pocket $10,000 Tax-Free

This is a great free-income perk for people who are fortunate enough to live within a reasonable driving distance to some ultimate destination. Think Super Bowl, the Masters, U.S. Open, World Series, Olympics. Congress ruled a few years ago that if you put your home up for a short- term rental – specifically, that’s 15 days or less – you can’t take any of the deductions of a real rental property, but you can keep the income from the rental tax free.

But $10,000? Why not. If you have a home with three or four bedrooms and a sleeper sofa in the family room, you can sleep up to 10 people. Considering a single room at such events can go for $500 to $1,000 a night, sharing an entire house for a shared cost of $10,000 is a steal.

Tax-Saving Strategy No. 20:
Host a Business Meeting at Your Home to Improve Your Taxes Even More

So, maybe you don’t live in Augusta, Phoenix, Forest Hills, or any of the other places that can attract a super-sporting event. Even so, there’s another way you can rent your home tax free (and more) if you own your own business. How? By hosting a meeting at your house and charging it back to the business. It’s a win-win strategy. You get the free-of-charge rental income and your company gets the deductions for renting a space for a meeting.

Tax-Saving Strategy No. 21:
Get $7,500 Off the Cost of a New Car

Is there a Mercedes or Porsche in your dreams? You can help finance it with a $7,500 tax credit as long as you buy one that you have to plug in.

Tax credits for electric-drive vehicles have been around for nearly 10 years, though the rules have gone through a variety of modifications ever since. Currently you can get a $2,500 to $7,500 tax credit for purchasing or leasing an electric-propelled car as long as you get in under the manufacturer’s 200,000 cars-sold limitation. There is no income limit for qualifying for the credit, although there is a limit of one per customer.

Tax-Saving Strategy No. 22:
Easily Avoid a $1,039 Insurance Tax on Your Tax Return

If you’re a middle-class American living on one of the 34 states that use www.healthcare.gov to handle the Obamacare program, you could be suddenly struck by an aggressive $1,039 insurance tax.

You see, if your tax return doesn’t indicate that you have health insurance, Obamacare mandates a penalty of 2% of your income, or $325 per person, whichever is higher.

But don’t worry. There’s an easy way to avoid this serious hit to your bank account. Just include information about your health insurance on your tax return. This easy trick could save you up to $1,039 come tax time. Make sure you consult your tax advisor for advice geared to your individual situation.

Tax-Saving Strategy No. 23:
Make Your Charitable Donations Really Count

Many make charitable contributions and take a tax deduction for them, but make sure you consider all that goes into making a gift of charity. It can really add up.

For example, let’s say you actually participate in a fundraiser, not just contribute to it. Keep track of everything you spend while working the event, from the paper and pencils you use to keep track of inventory, to the miles you drive to get to and from there (14 cents a mile), and even the cost of the ingredients in the snacks you donate as a courtesy to other volunteers. Over the course of a year, little things can add up to a lot.

Tax-Saving Strategy No. 24:
Give a Gift That Gives Back to You

If you plan to make a significant gift to charity, consider giving stocks or mutual funds that have appreciated to the value of the cash you want to donate. Just make sure you’ve owned the stock for at least a year, so you don’t get in the quagmire of short-term capital gains. Here’s how it would work…

Let’s say you’re a happy and prosperous alumna of the University of Virginia, and you want to give back by making a $20,000 donation toward the school’s endowment. Rather than write a check, sign over $20,000 of stock you own in, say, Disney, that has appreciated $12,000 since you bought it several years ago. Because you gave the stock away as a charitable gift, you will never have to pay the capital gains on the profit. And you get to deduct the full $20,000 on your taxes. Make sure you contact a tax professional for advice on your own individual situation.