I have a friend who loves toys. He loves buying toys, especially toys relating to a certain genre. He doesn’t have a lot of money, but he is smart. So he decided to create a toy museum and get 501(c)(3) tax-exempt status for it. Now the museum is in his house and he doesn’t want people running through his house, unexpected, on a daily basis. So he says, on his website, that tours are by appointment only. Brilliant.

Let me explain it for you, if you don’t understand already why this is such a great idea. Now whenever he wants to buy a toy he can just deposit money into his museum account, write that money off on his taxes, and then buy the toy. He can write-off the bottom part of his house, where his museum is, on his taxes and save there too. And he can enjoy his whole house, except when someone makes an appointment for a tour. How often do you think that happens? And when it does, so what? That’s just an opportunity to make another friend and collector. It’s a complete win-win.

Now it does require some work for form a non-profit corporation with 501(c)(3) status. You have to file papers and pay a fee to the State. You have to file papers, pay a fee, and answer lots of questions from the IRS. You have to get a few friends to agree to serve on your board. But if you aren’t a big charity and aren’t bringing in lots of money, the IRS and the state generally don’t bother you. My friend isn’t a lawyer. He isn’t an accountant. But he does a little paperwork and saves a ton on his taxes. And since he is buying for a charity he can buy his toys tax-free and write-off what he spent as a donation.

Now maybe you aren’t that into toys. But maybe you have an interest in a certain area of history. Maybe you collect Civil War or World War II materials or something else. Maybe you have an old farm that you don’t really want to farm, so you create a “farm life museum”. Be creative. Find something that you really like, create a non-profit 501c3 charity around it, and have fun.

Perhaps you don’t want to work that hard or just don’t care. But you have lots of extra cash sitting around. Why not find a cause that you believe in? Maybe your favorite charity helps other people or animals or advances a cause that you believe in. Isn’t it better to give your money to one of those groups and to write-off your donation on your taxes? That way you can do something positive with your money and have avoided giving more money to the government. They would just waste the money or do something evil with it. Not only that, if you give money to charity others may think more highly of you. That shouldn’t be your primary motivation, but if you have a business, it never hurts if others in the community think you are a good guy. Nevertheless, you should be a good guy and help good causes because it is the right thing to do. But if others think more highly of you as a result, well there is nothing wrong with that.