I am not an accountant, CPA, or lawyer. I'm just a freelancer (web design, marketing, trombone, etc) who is interested in following the United States tax code. I found a few things that have saved me on my tax bill (such as http://articles.moneycentral.msn.com/Taxes/CutYourTaxes/8TypesOfIncomeTheIRSCantTouch.aspx) and wanted to share the love. Let me know what you think, or if you have other tax strategies that are helpful. In 2009 the economy is not expected to improve too much. So anything we can do to save and be smart with the little amount of cash we still have on hand, is a big plus. Enjoy! Here are some of the main areas to concentrate on. Tax-free interest Car-pool receipts Sell your house Tax-free compensation 1.) Tax-free interest Buy municipal bonds. The interest you earn on bonds issued by a state, territory, municipality or any political subdivision is free from federal taxes. These munis become more valuable as your overall income rises and your marginal tax rate gets higher. 2.) Car-pool receipts If you do not work from home, and are commuting to work all the time, try to bring a friend along. When you carpool to carry people in your car to your work or their work, money you get from those people to split the cost of driving time, fuel, car maintenance, etc., is simply not taxed. The heart of this strategy might apply to other things in your life, because in this situation you've converted personal nondeductible expenses into excludable income. 3.) Sell your house Stay in the house for at least 2 out of 5 years (as the main place, not a second home) and you can avoid paying tax on the gain, and that's assuming you can actually sell in this housing market. There are rules, such as a limit of $250,000 in gain ($500,000 on a joint return) when you sell it, and the possibility of partial exclusions if you don't meet the two-year rule. 4.) Tax-free compensation In a nutshell this means you are asking your boss or human resources at your company to give you a raise in a different way than just adding dollars to your paycheck. Any time you can convert taxable income into non-taxable income, you've given yourself a raise. Below are the highlights. Use your health coverage - Health and hospitalization insurance premiums paid by your current or former employer are tax-free Cover your life - Group term life insurance coverage of $50,000 or less paid for by your company isn't taxed to you Send yourself to school - Your company can pay, and deduct, as much as $5,250 per year in educational assistance paid for either undergraduate or graduate courses Get you to work, and parked - Your company can give you discount fare cards, passes or tokens to take public transportation up to $100 per month tax-free as a de minimus tax benefit. Or, if you drive and have to pay for parking, your company can provide free parking, up to a maximum value of $180 per month, to you tax-free Cafeteria plans, aka Flexible Spending Accounts - allows you to select between taxable and non-taxable benefits. To the extent you chose non-taxable benefits, you have no additional income. Available non-taxable benefits may include group life insurance, disability benefits, dependent care and/or accident and health benefits But this is just the start. I'm sure there are other ideas out there. I lurk on bankrate.com, money.cnn.com, fool.com, moneycentral.msn.com and a few other sites to get more information and stay updated. Very interested to know what other US-based freelancers are doing about their tax bill. I'll be meeting with my accountant to do 2008 taxes next month, so this topic has been on my mind lately.