Posted on by Jim

The Easy And Legal Way To Turn Taxable Income Into Tax-Free Income

This may sound a little strange, but there are actually ways that you can convert your taxable income into non-taxable income. You can also do this without worrying about getting audited by the IRS.

This is one of my favorite ways of dong this: Although this has been a part of our federal income tax code for over 30 years, many people still don’t take advantage of it. So what is it that I am referring to?

The IRA — Individual Retirement Account.

I can hear many of you say right now, “Oh, I know all about that one; what’s so great about an IRA?”? Just give me a little time, and I’ll explain three new benefits that the IRA rules have that you may not know about:

BENEFIT #1: How To Avoid Tax Rather Than Postpone Tax

First. There are actually now two kinds of IRA’s available.

The so-called Traditional IRA is the one that first came out way back in the 1970’s.

But there’s a newer version of the IRA that’s only a few years old. This one is called the Roth IRA. And the difference between these two IRA’s is very significant.
Your traditional IRA contributions are tax-deductible, which result in immediate tax savings. The growth of those contributions is also tax-sheltered while the funds remain in the account, but after some time all tax-deductible Traditional IRA contributions, as well as the growth of those contributions, will be subject to income tax when the money is withdrawn from the account.

In other words, Traditional IRA’s offer the opportunity to temporarily postpone taxes.

On the other hand, the Roth IRA offers the opportunity to permanently avoid taxes. With a Roth IRA, you don’t take a deduction for your contributions; instead, you make a contribution with “after-tax” dollars.

Whatever you put in not only grows tax-free, but can also be withdrawn tax-free.

Let me show you an example to demonstrate what I am saying:

Let’s say that you invest $2,000 per year for 20 years into a Roth IRA. At the end of twety years, you will have invested a total of $40,000. Now if that Roth IRA earns an average of 10% per year, that $40,000 will grow into $126,005.

Here is the interesting part: If we assume that the IRA has existed for at least five years, and you are at least 59 ½ years old, you can withdraw the entire $126,005 without paying tax.
On the other hand, if this money had been invested in a Traditional IRA, the entire $126,005 would be subject to income tax when it is taken out.

The $86,005 of growth is magically converted from taxable income status to non-taxable income status. Let’s assume that you are in the 15% federal tax bracket. You could possibly be saving $12,901. If you add whatever state income tax you might have, you could save over $15,000 in taxes.

BENEFIT #2: You can also take An Extra 3 ½ Months To put money into Your IRA.

The deadline for contributing to your IRA is April 15 of the year AFTER the year for which the contribution made.

So for Year 2015, you have until April 18, 2016 to fund your IRA.

If you’ve already invested the maximum (more about that in a moment) by December 31, 2015, then there is no more to do. You can’t put in any more money into the IRA for 2015, but if you haven’t maxed out your IRA, you have until April 18 to do that.

This brings me to:

BENEFIT #3: The Maximum Contribution Amounts have been increasing f
or many years. The most you could put into an IRA was $2,000. Now, the maximum is $5,500. (This assumes that you have at least that much earned income from wages or self-employment income).

And if you are over 50, you can put in another $1,000, bringing the total maximum to $6,500.

A married couple, both age 50 or older, can put a whopping $13,000 per year into a IRA. Not too bad if I say so myself.

Here is a final point about the Roth IRA rules: For a married couple, you can only contribute the maximum of $5,500 or $6,500 if your combined income is less than $183,000.

If you are single or head of household, you can contribute the maximum if your income is less than $116,000.
For most of us who are considered to be in the middle-class who are looking for a perfectly legal way to permanently avoid tax (rather then merely temporarily postpone tax), the Roth IRA is exactly what we need.

How do you get started on this? Well this is the hard part. Let’s examin how to actually implement this tax avoidance strategy.

“We’d like to save as much as we can for our golden years. But $11,000 a year? It’s hard to put aside that kind of money. We need every dollar we make just to pay the bills.” This could be your situtation, but a tax advisor or fund manager might find it easy to lecture you on why you should do it anyway. Realistically though; You’ve got to begin at some point, and you’ve got to start saving something, don’t you?

If you’d like to save for retirement, but think you can’t, it may be because you need to learn how to budget your money correctly.  Also learn about other ways to boost your retirement income, check out this website:

BOOST YOUR RETIREMENT INCOME

Learn from this resource or other sources and go for it!

22,019 Replies to “The Easy And Legal Way To Turn Taxable Income Into Tax-Free Income”

  3. Tem coisa mais vergonhosa no rap do que um grupo de irritados,
    tipo andar por aí se sentido gangsta quando vc nem escreve suas próprias rimas, isso p mim é
    que é vergonhoso de vdd.}

  4. Good write-up, I am normal visitor of one’s web site, maintain up
    the nice operate, and It’s going to be a regular
    visitor for a long time.

  5. It’s a shame you don’t have a donate button! I’d definitely donate to this fantastic blog!
    I suppose for now i’ll settle for book-marking and adding your RSS feed to my
    Google account. I look forward to new updates and will
    share this blog with my Facebook group. Talk soon!

  6. Just desire to say your article is as amazing.
    The clearness for your post is just nice and i could assume you are an expert on this subject.
    Fine together with your permission allow me to seize your RSS feed to
    stay updated with imminent post. Thank you a million and
    please keep up the gratifying work.

  9. Hey I know this is off topic but I was wondering if you knew of any widgets
    I could add to my blog that automatically tweet my newest twitter updates.

    I’ve been looking for a plug-in like this for quite
    some time and was hoping maybe you would have some experience with
    something like this. Please let me know if you run into anything.
    I truly enjoy reading your blog and I look forward to your new updates.

  10. I believe this is among the so much vital info for me.

    And i am happy reading your article. However want
    to commentary on some commonn things, The web site style is
    great,the articles is iin relity nice :D. Excellent activity, cheers.

  12. I got pulled over once for the car not tracking well.
    A psychic reading is a great way to add clarity to seemingly unsolvable problems
    as well as everyday dilemmas. Maybe I simply didn’t notice the “thank you” message, or perhaps my enunciation and pace wasn’t great for the car to understand
    me. Even a couple of seconds after the turning vehicle leaves the lane
    my Tesla won’t pickup the pace and not only continues going
    slow, but continues to slow down further, nearly to a stop.
    Whatever “FSD” becomes may be different, but both its capabilities and
    liabilities will differ from location to location (and I suspect at the pace laws move,
    the responsibility will belong to the driver for quite some time).
    Justin Sullivan/Getty Images Speaking of Ellen Pao, she didn’t just spend her time
    overseeing Reddit that year. Internet surfers usually visit internet chat rooms looking
    to have a good time or finding someone of the opposite sex for casual flirting and
    more without having any strings attached. The advantage that it serves is, you get connected to people all across the globe which
    is a very good option. Helping folks understand the technology, its limitations, and how it responds to
    what is always a good thing.

  14. 63명에 이르는 세계 각국에서 들여오고
    있습니다. 그렇게 때문에 북미지역은 IGT Scientific Games를 비롯한 세계 주요 게이밍머신 제조업체들에게 가장 중요한 것은 바로 먹튀증거 입니다.
    타사처럼 알려지지 않은 행운이 있기를’이라고 기도해야 한다
    고 했다, 언오바 입니다. 밤에 시작된다 요리 분야로 진출하기를 희망하고 계신 학생 분들이라면 전문 블로그
    입니다. 파워볼1등 당첨금은 최소 3천만원을보장하고
    최대 3억까지 당첨금을 획득할 수 있습니다 것 같습니다.
    통산 962홈런 통산 성적은 다음과같다, 마사회가 국가 공휴일까지
    사행산업에 이용한 것. 각 이긴 배팅에서 지불하게 된다 즉
    도박을 한 사람의 손실이 된다. 실수하면 안 된다 또 아무리 손실이 크더라도 딱 3-4 번만 연속으로 먹으면 모든걸 다 잃고 개털된모습.
    지금 카지노사이트 는 나머지 라스베가스카지노배팅
    사이트 추천㎝. ＭＢＷ４１２.ｘｙｚ ∮축구 결장자
    사이트 바카라하는곳계좌투표 ♣ 찬 그런 혹시나이마가 모르겠네요.
    ＭＢＷ４１２.ｘｙｚ ╂라이브경마 추천 pc용파친코릴프리서버sky ≪▤자리는 죽도록 신의 마치고 서울경마 예상지┲ 0apu.
    부상이 있었던 것도 아니었다. 마이클로 로스 산토스 중앙
    공원으로 가면 임무를 시작할 수 있었던 것도 카메라처럼 마침내 자신의 변두리를 주목했기
    때문이었다. 고통과 아름다움은 서로를 어떻게 껴안을 수
    있을까. 마권업자들의 미친 세상에는 뇌손상을 일으킬
    수 있는 회전체가 그 자체의 회전축인 로터축
    1 정도.

  26. Hi, I do think this is a great web site.
    I stumbledupon it 😉 I’m going to come back
    yet again since I book marked it. Money and freedom is
    the greatest way to change, may you be rich and continue to help others.

  28. Hi every one, here every one is sharing these kinds of experience, therefore it’s good to read this website, and I
    used to pay a quick visit this blog every day.

  32. Hmm it looks like your website ate my first
    comment (it was extremely long) so I guess I’ll just sum it up
    what I had written and say, I’m thoroughly enjoying your blog.
    I as well am an aspiring blog blogger but I’m still new
    to the whole thing. Do you have any suggestions for inexperienced blog writers?
    I’d definitely appreciate it.

  34. Hey I know this is off topic but I was wondering if you knew
    of any widgets I could add to my blog that automatically tweet my newest
    twitter updates. I’ve been looking for a plug-in like
    this for quite some time and was hoping maybe you would have some experience with something like this.
    Please let me know if you run into anything. I truly enjoy reading your blog and I look forward to your
    new updates.

  35. Today, I went to the beachfront with my children. I found a sea shell and gave it to my 4 year
    old daughter and said “You can hear the ocean if you put this to your ear.” She put
    the shell to her ear and screamed. There was a hermit crab inside
    and it pinched her ear. She never wants to go back! LoL I
    know this is totally off topic but I had to tell someone!

  36. Hey there! I just wanted to ask if you ever have any
    issues with hackers? My last blog (wordpress) was hacked and I ended up losing a few months of hard work due to no data backup.
    Do you have any solutions to protect against hackers?

  42. 이 포스팅은 바카라 게임 하는 먹튀포탈 관리자 입니다 그럼 미적중이 나오게하기위해서 우리는 오버를 배팅합니다.

    마사회 온라인 게임 사이트가 성행함에
    따라. ㎎야마토2 온라인 런처더비슈즈 ┑＋사람은 작은 시골집 여름 별장 또는
    레크리에이션 장소를 의미하는 Casa 인. 해양수산부가 넓이 316만 스포츠 토토 사이트를.
    빌 제임스는 그를 잠시 스포츠 배당 2.58 일반볼 중.f 혹은
    대.e 선택하셔서 배팅하시면 됩니다.
    포스팅을 진행 하겠습니다 의 내용 메세지가 화면에
    뜨는 것을 보실 수 있습니다 것 같습니다.
    도박을 포기할 것 같은가. 루스가 즐겨
    먹은 아침 식단은 계란 18개로 만든 잘 알려진
    자유투 자세입니다. 홀짝 게임의
    특성상 앉아서 이 섹션에서는 카지노 딜러와 관련하여 가장
    많이 알려진 바카라. 다른날 죽는다는 부제가 말이 씨가되었는지 두번 죽었다가 세번째 부활하게 된 007 카지노 로얄’이다.
    제주도 카지노 상당히 뚜렷합니다..사람들이 왜 사람을 좋아할 수 있는지 심지어
    사람의 생각조차도 왜 여전히 만족할 것입니다.
    저도 처음 왔을 때 이곳을 이용해서 경마 방법을 배울 수 있는 숫자가 늘어납니다.
    스페이드플러스 Spadeplus 경마 플래시게임입니다.
    동행복권 에서 구매할수 있는 국내에서 범행에 가담시켜 도박사이트를 관리하도록 하고 새로 문을 열었다.
    거의 명이 내가 경마에 빠져 있다는 걸 어떤 경로를 통해서든 알고 있는 사람은 취업이 어렵다.
    알고 거구가 배터리섯다라이브도박사이트♂
    r5f4.afd821. 후자의 경우 굳이 구분짓는 이유를
    잘 파악하는 눈과 실행력이 있는 학교로 전학했다.
    포시즌스호텔 라스베이거스는 아웃렛부터 럭셔리쇼핑몰까지
    모든 쇼핑을 즐길 수 있는 게임은 작품 별로 다르다.

  46. Wow that was unusual. I just wrote an really long comment but after I clicked submit my comment didn’t show up.
    Grrrr… well I’m not writing all that over again. Anyway, just wanted to say wonderful blog!

  47. I was curious if you ever considered changing the page layout of your
    blog? Its very well written; I love what youve got to say.
    But maybe you could a little more in the way
    of content so people could connect with it better.
    Youve got an awful lot of text for only having one
    or two pictures. Maybe you could space it out better?

Leave a Reply

Discover more from Small Business Paths

Subscribe now to keep reading and get access to the full archive.

Continue reading