Your smartest tax moves? Tell us

Best tax tricks I've done:

1) drive the neighborhood during bulk pickup looking for good salvageable items and  donate them to Goodwill, Salvation Army, etc (hate to see good stuff thrown away and someone might as well take a tax deduction for it; made over $7,000 in donations last year alone :)

2) took a cue from Jeff Schnepper this year about converting a hobby to a business. Our band gets paid to play (we earn about $40-60 per person per gig),  I usually drive to my band practice from my job, I commute 100 miles to work each way....I checked with the IRS and the mileage from work to practice is deductible since it is considered a "second job" since I get paid for making music, and mileage for travelling to a second job from your first is deductible.

my gas bill for each day is $20 round trip. because of the mileage deduction for travelling to a second job, I can legally deduct $47 :) . and now that I'm carpooling <BFG>  THANKS JEFF!

1. Take a college class. Deduct tuition.
2. Have a kid. Deduct child care. Get a tax credit for having a child.
3. Teach for a living. Deduct job expenses.
4. Have a gig for which someone pays you, but not well. Deduct expenses.
5. Overpay your taxes. Enforced saving means extra money back.
6. Have a home office as the sole place of business for your side gig. Deduct home office expenses.
7. Spend generously on dental care ($6800 on my daughter alone this year.) Take an interest-free loan to pay it off. Deduct entire amount b/c it is above your 7.5% AGI.
8. Contribute the max to your employer sponsored 401(k), because even if it just keeps growing at COLA/inflation, you're still saving money, and getting some from your employer. Plus--> tax free income

I don't know what island "OnAnIsland" is on, but here in the rest of the good old US, Roth IRAs are NOT exempt from inheritance taxes!  Federal Estae Tax always applies, although some states may consider Roths to be exempt from their STATE'S death taxes.

And, "Bentovillian," don't be so paranoid - the gov't CANNOT AND WILL NOT "take" our 401(k)s to "distribute" !!  I'm afarid your right-wing paranoia will prevent some folks from investing in their BEST OPTION FOR RETIREMENT SAVINGS, a 401(k) with an employer match.  Most companies don't have Defined Benefit plans anymore, so our financial health in retirement is UP TO US INDIVIDUALLY (with a little help from Social Security, which will never alone be enough to support a middle-class lifestyle).  :)

I suggest that you take a withdrawal from your traditional IRA account each year that maximizes income allowed without going to the next marginal rate. This procedure can mean your never-taxed-on-depos​it IRA funds could be, ultimately, never taxed at all.

It also means your traditional IRA's mandatory withdrawals beginning at age 70.5 will be the absolute minimum . . . and, again, potentially never taxed at all (depending on your marginal rate).

I wish Money In The Bank had told what the late changes were that helped  her.

I have found that for a retired couple keeping your income under $83,000 gross or $69,000 taxable will keep you in the 15% bracket and out of the 25% bracket.  This helped us since we have been taking money from our IRA while drawing our Social Security benefits. 

I have four reasons for taking out money from the IRA.  One, the money market is not insured in the IRA. Two, I don't want to have to take it out all out at once and pay higher taxes.  I don't want my children to have to deal with paying the taxes after our demise.  I know they would take it out all at once.  Three, we don't know what taxes will be in a few years, but they will probably much be higher.  Four,  you cannot deduct your losses  in a 401K or IRA on income tax.

The first year we took out a lot to pay off our debts and we had to pay a lot of income  taxes.

I don't mind paying taxes, but when you retire you need to save what you can because you usually won't earn much more to replace what you have paid in taxes. 

I know many would disagree, but I think people would be better off to keep part of their savings outside the 401K/IRA.  Sure, you will pay income taxes on the money before you buy a stock or fund, but then you will have paid it and then only have to pay on the profit when you sell.  It is hard after you retire to  sell stocks outside the 401K/IRA, plus take money out of the IRA/401K each year and not pay high taxes.  

Another reason we started withdrawing from our IRA is because it seems like it is dangerous to have money where the government can get to it.  There are rumors they want to use our 401K/IRA money and dole it out during retirement.