Powerful Money-Saving Tax Strategies Anyone Can Use

It may be too late to do any good for the taxes due on April 15th, but if you begin implementing these two powerful strategies now, you can save thousands off next year's tax bite.

Strategy #1: Start a business - don't worry if it doesn't make you any money. Any citizen can start any business and deduct a multitude of otherwise undeductible costs, even if no income is earned from the business. Your business only needs to make a profit in year 4 and 5 to remain qualified. The first three years you get the tax deductions even if you never make a dime. What deductions? Among any costs for the business, you can also write off part or all of the cost of equipment, vehicles etc. if used for the business. But you can also deduct home office expenses - if, for example you use 20% of your square footage for exclusive business use, you can write off 20% of home electricity costs, heating costs etc. Also, much of your car insurance and certain other costs. So, start running a hobby as your business. Or grow a veggie garden and write off the costs. You can even become an author and write off more expenses than you could ever dream of, as authoring books or articles requires research - like traveling. Start a business as a treasure hunter and write off the cost of metal detectors. Woodworking? Write off all those great new tools you always wanted.

Strategy #2: Do you have children under the age of 18 who do not already have income? If you run your business as a sole proprietorship, you can "pay" each of your minor children more than $5000 per year. Because the amount is under $6,000 neither you nor the child needs to file taxes on it. And you get to write it off as salaries.

For example, let's say you have two minor children. You figure you ordinarily spend$3,000 a year providing each with clothing, computers and other stuff. You also figure you put about $2,000 a year into their college fund. Normally, all that money - $5,000 a year each - is not tax deductible. But as a sole proprietor you can pay that same money to your child then let the child pay for their own stuff and college fund. Same $5,000, but now you can deduct it from your taxes and because it is less than the personal exemption, the child does not get taxed, either. If you are in the 28% tax bracket, you can save $1400 in taxes. Two children? You save $2800 a year - enough to fund your IRA.

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