I paid a six-figure tax bill this year and I’m fed up with sending my hard-earned cash to Uncle Sam — is it possible to avoid paying income tax (legally)?

Deduct your home office

If you're self-employed (or work remotely) and maintain a home office for your business, the IRS allows deductions that, at first glance, may appear too good to be true.

In the tax agency’s own words, “deductible expenses for business use of your home include the business portion of real estate taxes, mortgage interest, rent, casualty losses, utilities, insurance, depreciation, maintenance, and repairs.”

Even if you use a simplified option, you can take a standard deduction of $5 per square foot of home office space up to a maximum of 300 square feet. The caveat: the room has to be used exclusively for business purposes.

Also, consider using a side hustle to claim business deductions.

If you’ve bought a new laptop, put business-related mileage on your car, or used a certain percentage of your home internet for work, all of these and more may be eligible for a tax break. All those freelance jobs or ride-share services could pay off.

Check the tax laws carefully, however, and keep in mind that certain expenses, such as business outfits, are not tax deductible.

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Leverage the mighty Schedule C

With Schedule C (Form 1040), you can report profits, losses, and expenses from a freelance job or as a sole proprietor — and it may be filed in addition to any money you make via other jobs.

The idea here is to show a loss (legally, of course) that may help offset your tax obligations in other areas.

Since Schedule C calculates your net profit from self-employment, in order to help reduce your self-employment tax, try to deduct every possible business expense, from office rent and work-related vehicles to any office supplies you require.

Just remember they can’t be personal items and all need to be related to the necessities required to operate your business effectively.

Be sure to keep thorough records in the event of an audit and check with a tax expert if you have any questions or concerns.

Make contributions to retirement accounts

Setting aside funds for your retirement through a 401(k) or IRA can put money in your pocket in numerous ways.

Contributions to a 401(k) are considered pre-tax, which means you don’t have to pay any income tax the year of the contribution. Instead, you pay tax when you withdraw the money during your retirement — and it’s typically at a lower rate than when you’re holding down a job.

In 2024, the annual limit for 401(k) plans was increased to $23,000 (up from $22,500 in 2023) for employee contributions — and $69,000 total combined employer/employee contributions.

If you’re over the age of 50 you’re also eligible for an additional catch-up contribution of $7,500, raising the employee limit to $30,500.

Traditional IRAs also use pre-tax dollars to grow your investment, tax-deferred, until you withdraw it in retirement when you’re in a lower tax bracket.

As of this year, the total traditional IRA contributions you make annually can’t exceed $7,000 ($8,000 if you’re 50+).

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Contribute to an HSA

Another outlet for reducing your taxable income is to take full advantage of this triple-tax benefit account.

If you have a health savings account (HSA), consider increasing your contributions (which are pre-tax) in order to reduce your taxable income.

Not only can it grow tax-deferred, but distributions are eligible to be tax-free so long as certain conditions are met.

This tax-advantaged savings account is meant to help people with high-deductible health insurance plans (HDHP) cover out-of-pocket healthcare expenses, but it’s also a highly-effective tool in reducing your income tax.