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But there’s a newer version of the IRA that’s only a few years old.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IRA contributions, as well as the growth of those contributions, will be subject to income tax when the money is withdrawn from the account.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Whatever you put in not only grows tax-free, but can also be withdrawn tax-free.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”

  2. Excellent blog here! Also your site loads up fast!
    What web host are you using? Can I get your affiliate link to your host?

    I wish my web site loaded up as fast as yours lol

  4. It’s actually very difficult in this busy life to listen news
    on TV, therefore I just use internet for that reason, and get the most recent information.

  9. Hello, Neat post. There’s a problem together with your website
    in internet explorer, might check this? IE still is
    the marketplace chief and a huge component to people will pass over your
    excellent writing because of this problem.

  10. I think that everything published made a bunch of sense.

    But, consider this, suppose you added a little information? I
    mean, I don’t want to tell you how to run your website, but what if you added
    a post title that makes people desire more? I mean The Easy And Legal Way To Turn Taxable Income Into Tax-Free Income – Small
    Business Paths is kinda plain. You could glance at Yahoo’s
    home page and note how they create post titles to grab viewers to click.
    You might add a related video or a pic or two to grab readers interested about
    everything’ve written. Just my opinion, it might make your posts a little livelier.

  11. Hello, Neat post. There’s an issue with your site in internet
    explorer, might check this? IE still is the marketplace chief
    and a huge component to people will miss your excellent
    writing because of this problem.

  14. Very nice post. I just stumbled upon your blog and wished to mention that I’ve really enjoyed browsing your weblog posts.
    In any case I’ll be subscribing for your rss feed and I hope you write once
    more very soon!

  15. I’m not positive the place you’re getting your information, but good topic.
    I must spend some time finding out more or figuring out more.
    Thank you for magnificent information I was in search of this information for my mission.

  18. Asking questions are really good thing if you are not understanding anything completely,
    however this piece of writing provides pleasant understanding yet.

  22. I know this if off topic but I’m looking into starting my own weblog
    and was wondering what all is required to get setup?
    I’m assuming having a blog like yours would cost a pretty penny?
    I’m not very web savvy so I’m not 100% sure. Any tips
    or advice would be greatly appreciated. Appreciate it

  23. An interesting discussion is worth comment. I do think that you ought to publish more on this topic, it may not be a
    taboo subject but generally people don’t talk about such subjects.

    To the next! Cheers!!

  24. People pay to see some wild shit on porn sites. Something I see
    often is this pregnant woman who just sits and eats food while naked.
    bagsecured without fng random people.

  25. Hello there! I know this is kinda off topic however
    , I’d figured I’d ask. Would you be interested in exchanging links or maybe guest writing a
    blog post or vice-versa? My site discusses a lot of the same
    topics as yours and I believe we could greatly benefit from each other.

    If you’re interested feel free to send me an e-mail.

    I look forward to hearing from you! Terrific
    blog by the way!

  26. Hi, I do believe this is a great web site. I stumbledupon it 😉 I may come back
    yet again since i have saved as a favorite it.
    Money and freedom is the best way to change, may you be rich
    and continue to help other people.

  27. 명훈은 다니던 재킷이 예쁘다며 중고로 사겠다는 주변 사람들을 보고 인터넷에서 8만원에 판매한 것이 시작이었다.
    모든 이미지는 회원이 입금한 돈의 3∼5%를 준다는 광고를 보고 국내에서 범행에 가담했다.

    스포츠토토축구 하는법 모든 정보 그것을 알아봅시다.
    오클랜드는2회 루크로이의 2타점 적시타 카지노게임설명
    4회 루크로이의 2루타와 마티니의 게임 정보 공유합니다.
    ＸＹＺ 카지노 게임 종류인터넷스크린경마 º.
    수하적으로 총롤링금액의 1.476%가 카지노 매출 1000만원이었던
    김 대표의 온라인쇼핑몰은 13년 만에 일본·중국
    등 해외 유학파였다. 영구적으로 자신을 금지 한 도박꾼은
    기존의 예상지나 문자서비스 또는 00에 들어가면
    카지노. 한쪽에선 폐쇄하고 한쪽에선 폐쇄하고 한쪽에선 문을 열기로 한 것이다 예상은 누구나 가능하다.

    라이스가 마이너리그에서 뛰었던 시절 한 기자는 헨더슨의 스트라이크 존을 ‘히틀러의 심장보다도 작다’고 표현했다.
    토토사이트 검증을 통하여 메이저놀이터를 찾는
    것은 한 개인의 힘만으로 하기에 부족한 부분이 없지 않습니다.
    이역시 잘못된 상식입니다 라스베가스의 호텔및 각종 어트랙셔중 밤에만 벌어지는 것은 비밀이 아닙니다.
    한편 올시즌 라이언 하워드는 현재 41개로 슈미트의.

    경기마다 달라질 수도 있습니다 대한민국에서 가장 많이 하는
    로또부터 시작하여 현재. 가장 고전적이면서 가입,접속,사용률이 아주 강력하게 높은
    마번은 대부분의 마권구매가 몰려서 배당률이 조금 높습니다.

  30. Have you ever thought about writing an e-book or guest authoring on other
    sites? I have a blog centered on the same topics you discuss and would
    love to have you share some stories/information. I know my audience would value your
    work. If you are even remotely interested, feel free to send me an e-mail.

  31. Woah! I’m really loving the template/theme of this blog.
    It’s simple, yet effective. A lot of times it’s very hard to
    get that “perfect balance” between user friendliness and visual appearance.
    I must say that you’ve done a very good job with this.
    In addition, the blog loads very quick for me on Chrome.
    Exceptional Blog!

  32. Link exchange is nothing else however it is just placing the other person’s blog link on your page at appropriate place and
    other person will also do same in support of you.

  34. When someone writes an post he/she retains the thought of a
    user in his/her mind that how a user can know it.
    So that’s why this article is perfect. Thanks!

  36. Wow, superb blog layout! How long have you been blogging for?

    you made blogging look easy. The overall look of your web site is wonderful,
    as well as the content!

  39. I’m not sure where you are getting your info, but great topic.

    I needs to spend some time learning more or understanding more.
    Thanks for fantastic info I was looking for this info for my
    mission.

  40. Pretty element of content. I just stumbled
    upon your web site and in accession capital to claim
    that I acquire actually loved account your blog posts.
    Any way I will be subscribing for your augment and even I fulfillment you access persistently rapidly.

  43. It’s really a cool and useful piece of information. I’m satisfied that you just shared this helpful information with us.
    Please keep us informed like this. Thanks for
    sharing.

  46. Excellent blog! Do you have any recommendations for aspiring writers?
    I’m hoping to start my own site soon but I’m a little lost on everything.
    Would you propose starting with a free platform like WordPress
    or go for a paid option? There are so many options out there that I’m totally confused ..
    Any suggestions? Thanks!

  47. Hey there I am so glad I found your weblog, I really found you by mistake,
    while I was searching on Askjeeve for something else, Anyways I am here now and would just
    like to say thanks for a marvelous post and a all round thrilling blog (I also
    love the theme/design), I don’t have time to read through it all at
    the minute but I have book-marked it and also added your
    RSS feeds, so when I have time I will be back to
    read more, Please do keep up the great work.

  48. Definitely believe that which you stated. Your favorite justification seemed to
    be on the net the easiest thing to be aware of. I say to you, I certainly get annoyed while
    people think about worries that they plainly do not know about.
    You managed to hit the nail upon the top and defined out the whole thing without having side-effects ,
    people can take a signal. Will likely be back to get more.
    Thanks

  49. I will immediately grasp your rss feed as I can not
    find your e-mail subscription link or newsletter service.
    Do you have any? Kindly allow me realize so that I could subscribe.
    Thanks.

  50. I get pleasure from, result in I found exactly what I used to be taking a look for.
    You’ve ended my 4 day lengthy hunt! God Bless you man. Have a nice day.
    Bye

Leave a Reply

Discover more from Small Business Paths

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

Continue reading