When people think of tax shelters, they sometimes think of Swiss bank accounts, shady overseas investments, or fraudulent or questionable activities by wealthy but unscrupulous businessmen. That is an unfair characterization.

The TurboTax website sums it up nicely – “A tax shelter is any legal strategy (that) you employ to reduce the amount of income taxes you owe.” Obviously, anything that falls outside the legal boundaries is an illegal tax shelter and not something you want to pursue – but there are plenty of legal tax shelter options available to you.

Simply itemizing and taking all the deductions that you qualify for is a form of tax sheltering. People get into trouble by stretching the qualification rules – for example, claiming a home office deduction when the space is used for work but not exclusively for work – but if you follow the rules that the IRS outlines, you should be in fine shape. If you cannot decipher the rules and are not sure your proposed sheltering method is legal, ask a fully qualified tax professional.

Meanwhile, here are some other common tax shelters that you may never have considered as such.

Retirement PlansRetirement plans are probably the most widely used tax shelters. Contributions are generally deductible up to certain limits, and the money in the account accumulates on a tax-deferred basis. By the time you withdraw your funds in retirement, you are likely to be in a lower tax bracket and thus will ultimately save on the total taxes that you pay.

These retirement plans may be 401(k)s, IRAs, or similar tax-deferred retirement vehicles. Roth IRAs are particularly useful if you can qualify for them. Since they are established with after-tax dollars, the earnings on Roth IRAs are tax-deferred – and eventually tax-free if you are over age 59½ and have had your Roth IRA for more than five years. Congress has been eyeing this pool of money for a few years now, so keep an eye on any legislation that may change the rules.

Homes – Your home can be a tax shelter in several ways. One of the most generous is the home-sale exclusion, which allows you to pocket the profit on the sale of your home without having to pay capital gains taxes. The amount of tax-free profit can be up to $250,000, or $500,000 for married couples.

Obviously, your home has to appreciate for you to receive this benefit, but if you are in that situation, this benefit is hard to beat, especially if you are empty nesters planning to downsize. IRS Topic 701 contains other details and qualifications for taking advantage of this shelter.

Trusts – There are a wide variety of trusts available as tax shelters, generally focused on avoiding or minimizing estate taxes and probate concerns. Varieties include credit shelter trusts to pass a portion of your estate to your spouse tax-free, generation skipping trusts to pass assets to your grandchildren, or irrevocable life insurance trusts (taking your life insurance out of your taxable estate and providing beneficiaries with income tax-free).

Trusts may be irrevocable, where you retain no ownership and control over the assets, or revocable, where you are able to change terms or terminate the trust entirely. Tax benefits are usually greater with irrevocable trusts.

Trusts are complex and have ramifications that must be fully understood before you commit to them – especially for irrevocable trusts. Seek professional financial and legal help before setting up a trust to meet your needs.

To the original question – are tax shelters risky? They do not have to be. Do some online research and work with a qualified financial professional to find the types of tax shelters that are the best for your situation. You probably won’t even need to memorize the number of any Swiss or Cayman Island bank accounts.

This article was provided by our partners at moneytips.com.

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