We all look forward to tax write-offs each year but at times they seem few and far between…or are they?
It turns out, there are tons of ways to earn income that will survive tax season and leave you with a pretty penny as well. Here are just 10 ways to earn tax-free income and hold onto money you’ve saved.
If your home is a fixer-upper and you have time to improve it, remodeling could be an opportunity to earn extra money. The more improvements you make, the more likely you’ll be able to sell the house for more than you originally paid, which translates to a nice profit for you and one that can’t be taxed. (There is a $500,000 exemption on capital gains for your principal home if you’re married and a $250,000 exemption if you’re single).To make the effort profitable, do as much of the remodeling and renovating yourself as you can. While not all of us are carpenters and plumbers, something as simple as new paint can increase your home’s market value when done correctly.
Thank you, Sir
One of the most practical ways to keep more of your money after taxes is to make the most of employer reimbursements. From the cost of office supplies to public transportation, you may be surprised at how much your employer is willing to reimburse. According to an article published in Forbes, in some cases, you can even ask for more reimbursements in lieu of a raise; employers are usually more than willing to oblige because this allows them to save on payroll taxes. Reimbursements work out well for you as well because these payments can’t be taxed and are yours to keep in full.
Carpooling is a great idea for anyone on a budget and an even better idea if you’re the one driving. Why? Because if everyone in the car pays their share, the money that they give you for gas will be tax-exempt. That’s right, your work buddies get a ride and you don’t have to share the cash with the government. Everyone is happy.
Payroll taxes are a bummer, but depending on the industry in which you work, they could cost you a lot less as an employer. If your employees are under the age of 16 and you are paying them a fair wage for their services, their payroll becomes deductible. Legality is important, however, and employers can only take advantage of this tax deduction if they abide by federal and state child labor laws. For a comprehensive list of these laws, check out the Department of Labor website.
If you’re looking for ways to save, don’t forget the value of your airline miles. While these aren’t technically sources of income, airline miles can be worth a lot and save you hundreds of dollars that you would have spent on airfare—money that you can instead hold onto scot-free. The best part is that there are numerous ways of earning more miles; booking airfare, using certain rental car services and signing up for airline promotions are just a few mile-earning methods.
Bring on the Houseguests!
While you would typically pay taxes on revenue from renting out your home, there is an interesting exception to the rule. Rental income is only taxable if you rent out your property for more than 14 days out of the year. Two weeks or less, and you can keep it all. Conveniently, the same rule applies to vacation homes. One man’s two-week vacation is another man’s chance to make bank.
And to You, I Leave My Loot
Looking for nontaxable dollars? Then you’d better start sweet-talking mom and dad. Whatever they decide to leave you in inheritance money won’t be counted as income and therefore won’t be taxed. Neither will any death benefits that you might receive from their employer. However, if you inherit property that produces income, such as an apartment building, that will be taxed.
It doesn’t matter if the child is yours or adopted, foster care or child support payments that you receive from the government are nontaxable, according to inMontgomery Media Group. The IRS is even willing to account for expenses that aren’t covered by foster care payments. As a foster parent, in some instances you can deduct extra expenses as charitable contributions, but only if you are caring for the child to benefit the state and not yourself. The National Foster Parent Association offers more in-depth information about tax laws for foster parents. You should also note that the tax laws are different for spousal support payments.
The Discount Counts
We’ve already discussed the perks of employee reimbursements, but that’s not all that your workplace can do for you. Employee benefits and discounts are equally useful in saving up tax-free cash. Some prime examples of valuable benefits include healthcare, work vehicles and meals served on work premises. None of these can be taxed because they are considered “compensation” instead of income. The same goes for employee discounts–the money you save when you buy something from your employer isn’t taxed later. You can find a longer list of nontaxable benefits online, courtesy of the Houston Chronicle.
Accounting for Your Presents
Is any gift really free? According the IRS, all of them are, or at least most of them. If a friend or relative decides to gift you some cash, there’s no need to report the amount to the IRS as a part of your income. Medical expenses or tuition paid on someone else’s behalf also qualify as gifts. There are of course exceptions to this rule, and the monetary gift cannot exceed $14,000.
Photo courtesy 401 (k) 2013