Chances are that you’ve heard of tax loopholes before . . . even if you weren’t quite sure what they were. If that’s the case, don’t feel bad! A lot of people are unclear on tax loopholes, and, by definition, they are somewhat unclear themselves.
In general, though, you can think of a tax loophole as a special provision in the tax code that, when used to your advantage, can help you to save money. And, because they can help you to save, and sometimes in big ways, it’s definitely in your best interest to know about various loopholes and, when possible, to take advantage of them.
Take A Deduction On Your Home Mortgage Interest
If you pay a mortgage and are willing to itemize your deductions, you may be eligible for a special little loophole known as the home mortgage interest deduction. This deduction, or loophole, works out best for those with the fanciest houses since they tend to pay more in mortgage interest and, thus, enjoy more of a deduction. But, it can help out any homeowner, no matter where they live, and it’s definitely worth taking advantage of if you’re not already doing so.
Save
Money While Saving for College
Need to save money for your child’s
college fund? Then, look to Section 529 of the tax code. Under this code,
you’re allowed to put money into an educational investment plan and avoid
paying taxes on that money. The state you live in will generally determine just
how much you can contribute.
But, the nice thing is that, when you put
money in this type of account, instead of in a standard savings account, you
don’t get taxed on that money, which enables you to save more for your child’s
education while saving yourself some money too.
Think these loopholes sound incredible?
Believe it or not, they’re just the beginning! There are many other loopholes
out there, including some lesser-known ones. But, if you work with a qualified
tax professional and maybe even do some research of your own, you can find them
and use them to your benefit.