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17 Legal Secrets to Cutting Your Tax Bill

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american irs internal revenue...
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By Barbara Friedberg

Around the time I stopped fighting with my parents and began listening to them, my dad imparted some brilliant financial advice. He told me to become a scholar of the tax law. OK, perhaps he didn't use those exact words, but the message was the same: Know the tax law and take every tax deduction to which you are entitled.

This advice stuck with me, and I'm certain it has saved me thousands of dollars.

The Internal Revenue Service website offers excellent resources to help you further understand the following tax deductions and credits. Study the credits particularly well, as those benefits reduce your taxes dollar by dollar. In other words, if you owe $1,000 in taxes and receive a $150 tax credit, your taxes owed decrease to $850. That's an extra $150 in your pocket.

By spending a few hours each year keeping abreast of the tax law, you can save thousands on taxes over the years. In fact, keeping a tax reduction mindset in your everyday life will serve your finances well.



Do not count on a tax preparer to know every deduction for which you are eligible. Be a smart consumer and know the tax benefits you can claim. Every additional deduction you claim increases your disposable income.

Barbara Friedberg, MBA, M.S., is a portfolio manager, consultant, website CEO and author of "How to Get Rich; Wealth Building Guide for the Financially Illiterate." Learn more about investing and retirement at Barbara Friedberg Personal Finance.

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Amending Your Income Tax Return

What if you've sent in your income tax return for a previous year and then discover you made a mistake? You can make things right by filing an amended tax return. And, don't think an amended return will automatically cost you money; it's perfectly okay to change a return to capture a tax break you missed the first time around.

How to File Taxes with IRS Form 1099-MISC

If you receive tax form 1099-MISC for services you provide to a client as an independent contractor and the annual payments you receive total $400 or more, you'll need to file your taxes a little differently than a taxpayer who only receives regular employment income reported on a W-2.

What If I Did Not File My State Taxes?

At the time of this writing, the only states that do not charge a state income tax are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. If you live or earn money in one of the other 41 states or the District of Columbia, you may need to file a state income tax return by April 15. It is a separate and independent requirement from filing your federal tax return and failure to file it on time may result in interest and penalty charges.

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ga7smi

do what the rich do - cheat

March 15 2014 at 2:19 AM Report abuse rate up rate down Reply
Virg.

$$-$$$=0

March 14 2014 at 10:56 PM Report abuse rate up rate down Reply
Smurfs Rule

If anyone thinks the IRS had and still has complete control of U.S. citizens, you are right! The IRS has always terrorized hard working decent Ameicans for the simplist errors while allowing big government executives and multimillionairs to slip through the cracks(our recent former Secretary of Treasurery for example). When it comes to all the free advise on how to avoid using a CPA, one should be aware of all the trickery injected into the tax system since ObamaScare was shoved down Americans throats. Even a highly educated and duty bound CPA has mammoth work loads trying to read and follow rediculous regulations and munitia, especially since 2008. If the above mentioned law has approximately 2,800 pages, most likely 1,000 covers massive changes to the tax code. I wouldn't attempt it even if a freeloader.
Good luck if you try!

March 14 2014 at 9:00 PM Report abuse -1 rate up rate down Reply
pkellycpa

These articles always omit the limitations on those who can use them.
Home office? Not if it's for your conveniance instead required by your employer.
Mileage, sure, but it's a miscellaneous deduction, which must exceed 2% of your income.
Convince me that you went to Disney World for business reasons.

We spend more time preparing returns than the author spent preparing this article.
We do know our stuff.

Who does your return, Barbara?

March 14 2014 at 7:07 PM Report abuse rate up rate down Reply
Joni Alexander

Why the heck would I allow my adult child to deduct the interest on her loans that I co-signed and I made the payments on in 2013? $2800.00 in capitalized interest! I'm taking that maximum deduction of $2500.00!

March 14 2014 at 5:41 PM Report abuse rate up rate down Reply
1 reply to Joni Alexander's comment
ljhanaway

Because many parents exceed income for claiming the interest on their own return, even for some recent graduates the amount is phased out. However, in most cases the adult child will be able to claim a portion of the interest.

March 14 2014 at 9:33 PM Report abuse rate up rate down Reply
hondabuck

Tax tip 9: third line: "for all for years of collage...should be"all four years"... nice work proofreaders!

March 14 2014 at 5:12 PM Report abuse rate up rate down Reply
clyogi

Where are the secrets? All of the items shown here are pretty well known.

March 14 2014 at 2:28 PM Report abuse rate up rate down Reply
Max Lilly

Death and Taxes, read my lips "no new taxes", live longer and longer if you can follow some basic guidelines

March 14 2014 at 2:28 PM Report abuse -1 rate up rate down Reply
antiqueanna

If audited say you want the Lois Lerner Law applied and claim the 5th.

March 14 2014 at 11:55 AM Report abuse rate up rate down Reply
pburoran

REPEAL THE 16TH AMENDMENT!!!!

March 14 2014 at 10:55 AM Report abuse rate up rate down Reply