What is a Tax Shelter?
Answer:
A tax shelter is a type of financial
arrangement for legally decreasing your taxable income. Tax shelters are usually specialized accounts, such as a 401(k), which lowers the amount of tax you’re required to pay on any money you earn. Investors often utilize tax shelters as an investment strategy to offset losses or minimize their tax liabilities.

If you’re eligible to receive a tax credit, you’ll reduce the amount of taxes you have to pay. A tax credit is not the same as a tax deduction. The value of a tax deduction depends on your tax bracket. The value of a tax credit is a dollar-for-dollar reduction on the amount of tax you owe.

Check with your accountant or tax attorney to make sure you’re taking advantage of the possible tax shelters for your money – it’s a wise investment.
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