- Posted October 24, 2013 by
Bizarre ways you can save on Tax
Early this year, taxpayers saw the end of the payroll tax holiday and the passage of the fiscal cliff deal. You probably had mini-heart attacks as you compute your taxes this year. As a business owner, you might have prepared for this year, but giving up hard-earned money, even for tax, is hard to swallow. There are ways to save on taxes for next year and avoid IRS tax penalties and other issues. Some people are so determined to save their money that they go great lengths for deductions. And they succeeded!
Tax Breaks You Never Knew
Did you know that fostering a pet waiting for a permanent home entitles you to a deduction? Expenses such as food, vet bills, even paper towels and your mileage can be deducted. Maybe it's time to open up your home to the little angels from the nearest rescue centers and save a few hundred at the same time. Just make sure the organization you're working with is a 501(c)(3) charity. Furballs on your couch is not so bad after all.
If you have a crippling fur allergy, then fostering a cat or a dog is not an option. How about investing on your retirement? In an interview with MSN, Todd Koch, a partner at accounting firm John Knutson & Co. said that individuals and families with limited income who are saving for their retirement are both eligible for a deduction and tax credit. Individuals with a maximum income of $28,750, heads of households with at most $43,123 of income and couples earning $57,500 at the highest, that invest on plans like an Individual Retirement Account (IRA) can have tax credits of up to $2,000. There are around 57 million households that qualify for the credit. However, a 2012 Transamerica Center for Retirement Studies survey indicated that at least 80% of the population has not heard of it.
So, you've been saving for your retirement for years and have at least an idea of the tax credit that comes with it. Now what? Well, work overseas! I'm not encouraging you to fly to Nepal and hide from the IRS in the slopes of the Himalayas. They will probably still find you. The first $95,100 of income overseas is actually excluded from U.S. taxes to avoid you paying twice for local tax and U.S. tax. That's not the only good news. If you are working in countries with no income tax like Monaco, Kuwait or Bermuda, you first $95k is practically tax free!
Ridiculous Tax Deductions
You live in a wacky world, and America is a special kind of wacky place, even with tax write-offs. The IRS actually allows offbeat ways you can minimize your taxes without getting in trouble.
Who knew that a trip to Bermuda can save you some dollars? If you're not into working overseas, a simple business meeting in the island can provide some sweet perks. You can also hold business meetings while writing off expenses in Barbados, Costa Rica, Dominica, the Dominican Republic, Grenada, Guyana, Honduras, Canada and Mexico, plus all other U.S. territories like Guam, Puerto Rico and the U.S. Virgin Islands. So, plan your next team meeting in a beach, while sipping a Piña Colada.
Not keen on traveling? How about breast implants? Well, the court already stated that such an operation is non-deductible as a medical expense. However, if you an exotic dancer (or planning to be one) then you can write it off as a business expense, just like what Chesty Love did. Born Cynthia Hess, with assets sizing 56 FF, the tax court considered her chest as a stage prop than a personal aesthetic due to the sheer weight. Each breast weighed around 10 pounds!
Ridiculous it may be, there are ways you can reduce your tax and save a lot as long as you play your cards right. Again, it is never smart to evade the IRS, just ask Martha Stewart and Wesley Snipes. The law is there not only to protect the state's interest, but yours also. Visit your local government office and ask for financial advice. If you can afford it, hire a financial adviser and create financial strategies. It is true that the early bird catches the worm, but a smart bird catches more worms.
Photo courtesy of Alan Cleaver on Flickr