Once upon a time, in an era of prosperity, wealthy Americans could hide some of their assets in complicated, ingenious financial structures called tax shelters, which enabled them to avoid paying taxes on major portions of their income.
Some devices for hiding wealth, such as overseas accounts, still exist. Most domestic tax shelters, however, have been shut down by Congress, the Internal Revenue Service and the courts. A few basic, legitimate devices to lower your tax bill still exist. Some – a mortgage, for example – are much closer to home than the intricate schemes of a few decades ago.
“By and large, really anytime you get a deduction or credit, it is sheltering you from some tax,” said Jerome Borison, an associate professor at the University of Denver’s Sturm College of Law.
You don’t have to risk fines or – as in the most extreme cases – jail time to keep a bit more of your hard-earned income, said Barbara Weltman, author of “J.K. Lasser’s 1001 Deductions and Tax Breaks 2014.” You must take care, however, to avoid the “too good to be true” deals.
"By and large, really anytime you get a deduction or credit it is sheltering you from some tax."
- Jerome Borison, associate professor, University of Denver’s Sturm College of Law