Using a tax shelter might not seem like something you want to do. After all, the term often brings to…
Using a tax shelter might not seem like something you want to do. After all, the term often brings to mind visions of wealthy people and businesses tucking away money in shady offshore accounts to avoid paying taxes.
“The connotation is of something abusive and fraudulent,” says Logan Allec, a CPA with Choice Tax Relief in Los Angeles. That reputation may have something to do with the fact that the IRS Office of Tax Shelter Analysis is devoted to uncovering unscrupulous ways people try to get out of paying their share into government coffers.
However, there are a number of perfectly legal and respectable ways to shelter money from taxes. These include tax-deferred savings, savvy investments and even your home.
“Tax avoidance is different than tax evasion,” notes Paul Murray, founder and president of PTM Wealth Management in North Wales, Pennsylvania.
Keep reading for everything you need to know about tax shelters and six options that could work for you.
What Is a Tax Shelter?
Depending on whom you ask, a tax shelter can be defined in different ways. Broadly speaking, though, it can be anything used to minimize a person’s income tax liability.
That means tax shelters can include strategies for deducting expenses to lower your adjusted gross income or paying for workplace benefits…