Whether you're a billion dollar banker or an average Joe, learn the best ways to dodge Uncle Sam before he can steal your green.
- Step 1: Borrow against the appreciated value of a boat, house, or land and use the profit to pay bills or invest in other property. This practice makes the income appear as a loss on your taxes.
- Step 2: Seek professional assistance from a tax attorney or accountant to avoid possible pitfalls and problems with the IRS. Know the rules and follow the laws to keep more of what you make.
- FACT: Throughout the 1940s and 50s, the top tax rate in the United States hovered between 90 and 92 percent, while for most of the 2000s, the top tax rate was only 35 percent.
- TIP: Real estate and housing laws vary by state and county, so be sure to do your homework before investing.
- Step 3: Live in an investment property for two of the five years you own it before selling it. Any appreciation of the value of the home or property is not taxed -- up to $250,000.
- Step 4: Plan ahead. Transfer your stocks to someone else, such as a friend or family member, in a lower tax bracket to dodge a capital gains penalty. The profit is taxed at a lower rate since their income is lower.
- TIP: Be aware that large sums over $13,000 count towards your lifetime gift and estate exclusion, and anyone under the age of 24 is exempt.
- Step 5: Exercise your business sense. Cover your losses with a put option, which is like insurance for a stock. You pay a fee to make sure a stock sells at a certain price. If the stock falls, you can cash it but only pay for the profit minus the amount for the put option.
- Step 6: Be generous and donate your shares of stock to a charity. Deduct the total value from your taxes the following year instead of having to declare the profit as taxable income.