Sky Mortgage

Tax shelters run from totally legitimate tax deductions, to tax havens used to illegally rip off billions from the U.S. Treasury. Even little things like giving charity give you a legitimate tax deduction. You can get your old clothes together, and drive off to the nearest Salvation Army. Hundreds of dollars worth of old clothes and furniture given away mean hundreds of dollars of tax deductions. Just please remember to get a receipt, in case you get a tax audit.

As is well known, part of the mortgage financing game is getting large and not so large tax write-offs. If you refinance, you can even deduct the extra points you had to pay on the loan, on a month to month, year by year basis. There are also state and federal tax deductions, which are "above the line" for alternative fuel vehicles, including hybrid vehicles, which use electric motors as part of their energy mix. Tax credits by putting money into your IRA are always great because you reduce your income and at the same time save for the future.

The biggest and best tax deduction for the little guy is to form your own business. You can be self-employed even in an after hours occupation, keeping your day job. All you have to do is prove that you have a profit motive. You don't have to actually make any money doing your job, since it is assumed in many businesses that you can have an extremely long start-up time.

Take for example, someone writing articles for the internet. He has to buy a PC, a personal computer to write articles, create computer files and send them to clients. He has to have a telephone line, and a DSL Internet provider to create his communications. He may have to drive to deliver materials, or go to meetings. That's already quite a bit of expenses that are tax deductible for a business.

You can see these itemized deductions adding up rapidly. What if the person needs a course to improve their computer skills? A portion of their apartment has been changed into their home office. Other people can do this even with potential money making hobbies.

To make things even better, there is no need to spend hundreds of dollars incorporating yourself. It may be advantageous to form an LLC, a limited liability company, in order to make sure that no one can sue you for your personal assets, and for other business reasons, but this is not required by the IRS.