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A two-year tax cut extension? That compromise between Congress and the president was nice, but you can do better. You can get a 0% tax rate on many kinds of income.

It’s pretty hard to avoid paying taxes on your paycheck. But there are all kinds of ways to pick up money that the Internal Revenue Service can’t touch — such as from rebates, fringe benefits and moonlighting.

Moonlight

The first couple of thousand dollars a year you pocket from outside jobs is likely to be tax free. Reason: You probably have all sorts of expenses, such as for continuing education, a home office, professional association dues and a computer, that you can write off against freelance income. Since these are expenses that you usually can’t otherwise deduct, your early freelance dollars are pure gravy.

Get Reimbursed

Ask your employer to cover more of your work expenses (like those professional dues) in lieu of giving you a raise. So long as your expenses are documented, the reimbursement is not income to you. Your company will save on payroll taxes, too. But don’t mess with country-club dues; these aren’t deductible.

Take the Bus

You can pull up to $230 a month out of your paycheck, pretax, to cover mass transit, vanpooling and commuter parking.

Hustle Rebates

Those grocery-store coupons may not be worth your time. But the $50 rebates you get on phones and computers definitely are. As a reduction in the cost of an item for personal use, a rebate is not considered taxable income.

Pay Off Credit Cards

Where else are you going to earn 18% on your money? To top it off, this 18% dividend is totally tax free.

Rent Your House Out

If you rent out a house for 14 or fewer days, the income is scot-free. Not only that, you don’t have to prorate or reduce your otherwise deductible mortgage interest and property taxes. Unlike the remodeling gambit, this one works on vacation homes, too.

Be a Good Neighbor

You babysit the neighbor’s children, and in return he paints your garage. You’re both earning money, in effect, by providing services. While the IRS can assess taxes on people in barter exchanges that involve account books and transactions with strangers, there’s no way to levy a tax on helping out a friend.

Have a Charity Tag Sale

You were going to send $500 to Doctors Without Borders anyway. Do it this way. Have a tag sale, unloading tchotchkes from your attic, and advertise that 100% of the proceeds will go to the worthy cause. If you haul in $490, that sum becomes, in effect, tax free income for your day of labor.

Set Up an HSA

In combination with a high-deductible health insurance policy for your family, you set up a health savings account and put $6,150 a year ($7,150 if you’re over 55) of tax-deductible money into it.

You can use the bucks right away to pay uncovered medical costs. But you don’t have to eat into the account in this fashion. Instead, pay your doctor bills out of your checking account. Then let the $6,150 compound tax free until you are retired.

If you use the HSA later in life for medical costs (which will be considerable; Medicare is going bankrupt) then both the principal and the earnings come out tax free.

Hire the Kids

If you own your own business, make your teenage children into employees. If the pay is reasonable for what they do, you can deduct the payroll, lowering your high-bracket net income. On the receiving end a child laborer owes no federal income tax on earned income below the $5,700 standard deduction.

If the kid also has investment income, the exact value of the freebie gets more complicated. But, in round numbers, $5,000 of summer job income is going to be free of income tax.

You will, however, have to cough up for Social Security and Medicare taxes.

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Our columnists are constantly fielding questions from our readers about credit issues. However, over the years, we’ve seen certain issues pop up more often than others. All this week, we’re having each of our columnists field one of the most frequently asked questions for our users. “To Her Credit” columnist Sally Herigstad is today’s columnist.

Question: I’m planning to buy a house in about six months, so I’d really like my credit score to be in the 800s by then. I already pay my bills on time. How can I make my credit score off-the-charts great?

The good news is that 750 is more than “pretty good.” Many lenders say they offer their best rates to customers with scores of about 720 or better.

However, in today’s credit market, it’s better to have a higher score than is absolutely necessary. And most of the tactics you’ll use to raise your score make good financial sense anyway. I think working to improve your credit score from good to great is a very worthy goal!

[See Tips to Raise Your Credit Score — Fast]

Credit scores are no longer any mystery. They’re based on how you pay, what you owe, how long you’ve been paying and other factors. Here’s what affects the widely used FICO credit scoring model and by how much:

Making all your payments on time accounts for 35 percent of your FICO score. You’re doing great on that. However, even having a 100 percent perfect payment history would leave 65 percent of your score to be determined by other factors.

Thirty percent of your FICO score is calculated from debt levels in proportion to the amount of credit you have available. Even if you never go over your credit limits or miss a payment, if you’re constantly almost bumping against your credit limit, you’re at a higher risk of default — from a creditor’s perspective.

Fifteen percent of your score — a significant amount — is based on length of credit history. There’s no way to change this number quickly, which is why it’s impossible for younger people to have perfect credit scores.

Ten percent of your credit score is based on any recent applications for credit. The more recent the applications, the lower your score. The credit scoring model’s reasoning is that people who are running short of cash often start looking for more sources of credit.

The last 10 percent of your score is based on your credit mix. That’s your history of carrying various types of credit; for instance, a car or home loan in addition to credit cards.

[See What Folks With Great Credit Scores Do Right]

When you know what affects your score, you can concentrate on the changes that will have the biggest impact. Here’s how you can have a higher score in just six months:

Month 1: Get a copy of your free credit report. Then, correct any errors you find on your report. Start this process now — not all mistakes are fixed on the first try.

Month 2: Improve debt levels by paying down credit card balances. Your balances at any time during the month should be no more than 30 percent of your available credit. If necessary, apply now for one additional credit card or request higher limits on your existing cards. New applications temporarily ding your score, but it should recover before you need your home loan. (Don’t open a slew of new cards, and by all means, don’t spend that new available credit!)

Month 3: If your credit report only shows credit cards, improve your credit mix by asking other creditors to report your information to the bureaus. According to myFICO.com, creditors such as student loan lenders, credit unions and local retailers are not required to report credit information, but it never hurts to ask.

Do not buy a car or anything else just to improve your credit mix score. It doesn’t help your score enough to be worth the money you spend.

Revive any old accounts you haven’t used in awhile so they will be reported and improve your length of credit history score. One transaction every six months is enough to keep an account active.

Month 4: Set up automatic payments. Even one late payment can hurt a decent credit score. Depending on your normal checking account balance, set up an automatic payment just large enough to keep you from ever making a late payment, or create multiple payments to keep your card balance close to zero throughout the month. When your bill comes, pay what’s left.

Month 5: To make sure your credit card balances are reported as low to the credit bureaus before you go loan shopping, start using mainly cash as much as possible now. You can also go online and check your credit card balances before the credit card statement period ends and pay it off early to keep from having your balance reported at its highest point.

Month 6: Do all your rate shopping for a mortgage loan within a short period of time so you don’t get dinged for multiple credit inquiries.

Good luck and enjoy your new home!

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Save just $5 a day, or $150 a month, for 30 years — earn 10 percent on it — and you’ll end up with a nest egg of $342,000. Would that make a difference in your life? (By the way, if you’re wondering how the heck you can make 10% on your savings, you can’t — at least without risk. It is possible, however: see my stock portfolio.)

The tricky part is saving that $5 without sacrificing your quality of life. And one of many ways of doing that is to pay for name brands only when name brands make a difference. Sound obvious? Take a quick stroll around any grocery store and you’ll see that it must not be at all obvious, because the shelves are stuffed with products that cost extra — sometimes a whole lot extra — in exchange for nothing more than a name.

I recently took a camera into a local grocery store and found some amazing price differences between name brand items and their generic equivalents. Check out the video below, then meet me on the other side for more.

As we walked around my local Publix to shoot that video, I jotted down the prices of some of the stuff we were looking at. Check out this list — it’s amazing that people will pay this much extra for substantially identical products, presumably simply because some commercial told them to.

1. Pain relievers and other over-the-counter medications

Acetaminophen — the active ingredient in Tylenol — is available in many generic products. Note that the generics aren’t similar: they’re identical. Why would you ever pay more for an identical product? This also applies to everything from cold medicine to eye drops — virtually every over-the-counter medication. The labels are right there — read them.

Name-Brand Acetaminophen: $10.99
Store-Brand Acetaminophen: $6.99
Difference: $4.00 (57 percent)

2. Water

Although I should certainly be used to it by now, I can’t get over the fact that people go to the store to buy something in a bottle that they could be getting nearly free in their kitchen sink. But even if you can convince me that bottled water is worth the money, you’ll have a heck of time convincing me that the gallon jug from Crystal Springs is noticeably better than the one from Publix. And if you’re really concerned about water quality and/or taste — why aren’t you buying a filter and making your own bottled water? I just don’t get this entire concept.

Name-Brand Water: $1.25
Store-Brand Water: $.85
Difference: $.40 (48 percent)

3. Milk

I’m sure there are connoisseurs of moo-juice that could distinguish name-brand milk from store-brand — but I’m not quite sure how they’d do it. Bouquet? Finish? Sounds like a bunch of bull to me.

Name-Brand Milk: $5.45
Store-Brand Milk: $3.39
Difference: $2.06 (60 percent)

4. Margarine

It’s already a substitute for butter. Is it really going to negatively impact your quality of life to substitute the substitute?

Name-Brand Margarine: $1.79
Store-Brand Margarine: $1.19
Difference: $.60 (50%)

5. Bleach

You’re taking a cup of chlorine and adding it to gallons of water in your washing machine. How could any TV commercial possibly convince you that a brand name will make your clothes come out better?

Name-Brand Bleach: $2.25
Store-Brand Bleach: $1.67
Difference: $.58 (35 percent)

6. Cleaning Products

Many — if not most — cleaning products are already overpriced substitutes for stuff you already have around the house. Two of the most popular news stories we’ve ever done were Household Products Vinegar Can Replace and Do-It-Yourself Laundry Detergent. But let’s assume that you have a fetish for spray bottles and insist on buying ready-to-use cleaning products: is the name brand getting your counter that much cleaner?

Name-Brand Cleaner with Bleach: $3.29
Store-Brand Cleaner with Bleach: $2.39
Difference: $.90 (38 percent)

7. Spices

Think your job is hard? Imagine if your career entailed convincing the public that your company’s salt — the most basic of ingredients — was better than some other company’s salt. The whole idea is preposterous. And yet, there they sit, side by side, with nothing but their labels and their prices to set them apart. And where spices are concerned, that’s just the beginning — can you tell your oregano from mine?

Name-Brand Oregano: $5.48/oz.
Store-Brand Oregano: $1.24/oz.
Difference: $4.24 (342 percent)

I’m going to stop this exercise here. Not because I couldn’t go on — I could turn this into a book — but those are all the specific prices that I wrote down while we were shooting the above story. There are literally hundreds — if not thousands — of examples of people routinely swapping hard-earned cash for something virtually worthless: a name brand. It happens in the grocery store, it happens in the clothing store and it happens at the car dealer. It happens everywhere.

Am I saying that name-brands are never worth the money? Of course not. I can tell the difference between Dunkin Donuts coffee and store-brand — that’s why I pay extra for it. But I certainly can’t tell the difference between brands of oregano, bleach, orange juice, bananas, cheese, spaghetti, flour, sugar and a plethora of other products.

Paying extra for name brands that don’t offer higher quality in return is nothing less than stupid. If you can use that money to instead build a $342,000 nest-egg, you absolutely should. Even if you don’t need the money, maybe you should still refuse to do what the commercials tell you and donate the difference to charity. In either case, the world ends up a better place.

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Earlier this week I answered a reader’s question on steps to take to improve her credit score.

But what about folks who don’t want to just to improve their credit score, but want to get it to the highest possible range? Before you make a move, you first need to know the most important information used from your credit report in determining your score. Check out MyFico.com for more detail on what make up your credit score.

[Click here to check current credit card offers, including rates and terms.]

Here are the two things that account for two-thirds of your credit score:

Your Payment History: Having a long history of making payments on time on all types of credit accounts is one of the most important items lenders consider before approving you for a loan.

Owed versus Available Credit: This compares the amount you owe versus the total amount of credit available. Your credit score can be lower when you use more than 50 percent of your available credit for each account. That’s because when you are close to maxing out on all of your credit limits, lenders see you as a higher risk and more likely to make late payments in the near future.

There are three other factors that account for about a third of your credit score:

Length of Credit History: In general, a credit report containing a list of accounts opened for at least ten years or more will help your credit score. The score considers your oldest active account and the average age of all accounts.

New Credit: Opening several new credit accounts in a short period of time can lower your credit score. Also multiple credit report inquiries may be seen as risky credit behavior on the near horizon, and can therefore lower your credit score. But “soft credit inquiries”, which include requests made by you, an employer or by a lender who “pre-screens” or “pre-approves”, have little or no impact. Also, multiple inquiries by automobile and mortgage lenders over a 30-day period count as just one inquiry, so shopping the lenders to get the best rate should not hurt your score.

Type of Credit You Use: Your mix of credit cards, retail accounts, finance company loans and mortgage loans is considered.

Your credit score ignores your age, salary and occupation. It also does not take into account financial gifts, support you receive, or your financial assets. For this reason, credit scores are less important for borrowers who seek loans that take these factors into account.

If you want to take action to increase your credit score, then take a look at folks with the highest credit scores. About 13 percent of folks have credit scores of 800 or higher. If you look at their credit profile, they have:

• four to six credit card accounts,
• no late payments in the past seven years,
• at least one installment loan — a mortgage or a car loan — with excellent payment history,
• an average of 10 years credit history per account and a few accounts with 20 years of good history,
• a low number of credit inquiries (fewer than three in the past six months),
• no bankruptcies, foreclosures, charge-offs or collections, and
• debt levels at no more than 35 percent of their overall credit limits per account.

The Bottom Line: Having a long history of making all payments on time, using the right mix of credit, and not maxing out on available credit are the keys to a having a great credit score.