Hidden Tax Strategies You Probably Haven’t Heard Of (But Should!)

Let’s face it—most tax advice sounds like a broken record. Max out your 401(k), save receipts, claim deductions. Yawn. But what about the tax strategies that don’t make the headlines? The ones that could save you serious cash without requiring you to become a full-time accountant?

Here are some lesser-known (but completely legal) tax strategies that might just make you feel like a financial wizard.

1. The IRS Will Pay You to Move—Kind Of

If you own rental property and are thinking about moving, there’s a sneaky way to cash in on tax benefits. It’s called the 2-out-of-5 rule. If you live in a property for at least two of the past five years, you can sell it and exclude up to $250,000 in gains ($500,000 for married couples) from capital gains tax - you probably already knew this fom your main home.

Here’s the hack: If you own a rental property and want to move, consider living in it for two years first. Then, when you sell, you get tax-free gains instead of paying capital gains tax on the sale. Just make sure the IRS doesn’t think you’re playing musical chairs with your properties too often!

2. Rent Your Own Home to Your Business (Tax-Free!)

If you run a business, you can rent out your personal home to your company for business meetings up to 14 days per year—and the rental income is tax-free under the Augusta Rule (Section 280A of the tax code).

The best part? Your business still gets to deduct the rental expense. Just make sure the rent you charge is reasonable (sorry, but you can’t bill yourself $50,000 per meeting and expect the IRS to be cool with it).

3. Deduct Your Hobbies (Legally, of Course)

If you have a side hobby that makes money (think photography, woodworking, or even reviewing fancy cheeses online), you might be able to turn it into a business and start deducting related expenses.

Here’s the trick: The IRS wants you to be trying to make a profit. If you can show a genuine effort to turn your hobby into a business—like having a website, keeping records, and attempting to sell products or services—you can deduct expenses like equipment, marketing, and even some travel. Just make sure to actually make a profit three out of five years, or the IRS might call it a hobby (and deny your deductions).

4. Skip the Taxes on Debt (Yes, Really!)

If you have business debt or even certain types of personal loans, you might be able to eliminate taxable income through something called debt restructuring.

If a lender agrees to reduce or forgive part of your debt, that amount is usually considered taxable income. However, if you can prove insolvency (meaning your debts exceed your assets), you may be able to exclude the forgiven amount from your taxable income. In other words, if you're broke enough, the IRS might just let it slide. (But don’t go racking up debt just for the tax benefits!)

5. Give Your Kids a Paycheck (Instead of an Allowance)

If you own a business, consider hiring your kids (yes, really). If they do legitimate work—like cleaning the office, filing paperwork, or running social media—you can pay them up to $14,600 per year tax-free (the standard deduction for 2024).

Even better? If your business is a sole proprietorship or an LLC taxed as one, you don’t have to withhold payroll taxes for kids under 18. That means your child gets tax-free income, you get a business deduction, and everyone wins—except the IRS, but they’ll survive.

Final Thoughts: The IRS Isn’t Sending You an Invite

The best tax strategies aren’t always the ones you hear about on TV. The key is knowing how to play by the rules while keeping more money in your pocket. And remember: The IRS isn’t going to personally remind you to take advantage of these benefits. (They’re too busy cashing other people’s checks.)

So, if any of these strategies sound like they could work for you, let's talk about how to make them work legally.

Schedule a call with Dylan Razzagone, CPA!