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But there’s a newer version of the IRA that’s only a few years old.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IRA contributions, as well as the growth of those contributions, will be subject to income tax when the money is withdrawn from the account.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Whatever you put in not only grows tax-free, but can also be withdrawn tax-free.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

  1. naturally like your web site however you have to take a look at the spelling on several of your posts.
    Many of them are rife with spelling issues and I in finding it very
    bothersome to inform the reality however I will definitely come back again.

  3. Latest Download Dream League Soccer 2020 match permits
    you to generate and control your workforce by recruiting Touch Soccer accredited
    avid gamers. One of the most wonderful variable referring to this match is you can actually put money
    into real avid gamers from the Earth for your personal team.
    DLS 2020 New Kits 2021 Download

    No cost Down load Juventus New Kits 2021 Desire League Soccer
    2020 Mod Apk+Obb+Knowledge is below for down load with your
    android phone, If you are addicted to soccer video game then you need to give Desire League Soccer 2020 (DLS 2020)
    Mod Apk Obb Knowledge operates beautifully on android, unlimited income
    or coins readily available, up-to-date graphics, players transfers.
    DLS 20 Mod APK Juventus Kits 2021

    Aspiration League Soccer 2020 is a wonderful soccer online
    video video game that demonstrates genuine graphics in the many recreation. If you need soccer
    on the web game titles, then have confidence in me, there’s absolutely nothing worthful than hoping
    this recreation on the Android today. DLS 20 APK Juventus New Kits 2021

    One other aspiration league soccer Juventus package url’s are providing the
    highest kits as we presented previously described and Also They’re DLS 2020 Hack Income unbelievably desirable and
    you may utilize them also for your FTS 15 along with FTS 20
    Despite the fact that they’re identified for DLS recreation.
    Juventus DLS 20 Data

    http://apkdownloadgame.com/juventus-dls-2021-kits-juventus-kits-2021-dream-league-soccer/

  4. Hi there! I’m at work browsing your blog from my new apple iphone!
    Just wanted to say I love reading through your blog and look forward to all your
    posts! Keep up the superb work!

  6. Please let me know if you’re looking for a author for your blog.
    You have some really good articles and I feel I would be a good asset.
    If you ever want to take some of the load off, I’d really like to write some
    content for your blog in exchange for a link back to mine. Please send me
    an e-mail if interested. Regards!

  8. You made some good points there. I checked on the net for additional information about the issue and found most individuals will go along with your views on this site.

  12. When someone writes an piece of writing he/she retains the image of a user in his/her mind that how a user can understand it.

    Therefore that’s why this post is outstdanding. Thanks!

  14. Heya i’m for the first time here. I found this board and I
    find It truly useful & it helped me out much. I hope to give something back and help others like you
    helped me.

  16. Hi there i am kavin, its my first time to commenting anywhere, when i read this post i thought i could also create comment due
    to this brilliant piece of writing.

  18. Hi every one, here every person is sharing such know-how, therefore it’s fastidious to read this blog, and I used to pay a visit
    this web site every day.

  20. Greate article. Keep posting such kind of information on your blog.
    Im really impressed by your blog.
    Hello there, You have done an excellent job. I’ll certainly digg it
    and for my part suggest to my friends. I am sure they’ll be benefited from this web site.

  22. I do agree with all of the ideas you’ve presented
    for your post. They’re really convincing and will definitely work.
    Nonetheless, the posts are very quick for starters. Could you
    please extend them a bit from next time? Thank you for the
    post.

  24. This is really interesting, You are a very skilled blogger.

    I’ve joined your rss feed and look forward to seeking more of your excellent post.
    Also, I’ve shared your website in my social networks!

  25. Thanks for every other informative blog. Where else could
    I get that type of info written in such a perfect method?
    I’ve a project that I’m simply now working on, and
    I have been on the glance out for such information.

  26. Fantastic goods from you, man. I’ve be mindful your stuff previous to and you are just too excellent.
    I really like what you have obtained right here, really like what
    you’re stating and the way during which you assert it.
    You’re making it entertaining and you still care for to
    stay it sensible. I can not wait to learn much more from you.

    That is really a terrific site.

  27. A fascinating discussion is definitely worth comment.

    I do believe that you should publish more on this topic, it may not be
    a taboo matter but usually people don’t discuss such issues.
    To the next! All the best!!

  29. Thanks for the good writeup. It if truth be told used to be a leisure account
    it. Glance advanced to more introduced agreeable
    from you! By the way, how can we keep up a correspondence?

  30. This is the right website for anybody who wants to find out
    about this topic. You know so much its almost
    tough to argue with you (not that I personally will need to…HaHa).

    You certainly put a brand new spin on a subject which has been written about for decades.

    Excellent stuff, just wonderful!

  31. This is a great tip particularly to those new to
    the blogosphere. Simple but very precise info… Appreciate your sharing this one.

    A must read post!

  38. Wonderful beat ! I would like to apprentice while you
    amend your web site, how could i subscribe for a blog site?
    The account helped me a acceptable deal. I had
    been tiny bit acquainted of this your broadcast offered bright clear concept

  39. Hi would you mind sharing which blog platform
    you’re using? I’m going to start my own blog in the near future but I’m having a difficult time deciding between BlogEngine/Wordpress/B2evolution and Drupal.

    The reason I ask is because your design and style seems different then most blogs and I’m looking for something completely
    unique. P.S Apologies for getting off-topic
    but I had to ask!

  41. It’s in point of fact a great and helpful piece of info.
    I am satisfied that you shared this useful information with us.
    Please stay us informed like this. Thank you for sharing.

  44. Thanks for some other great post. The placee else
    may anybody get that type of info in such a perfect
    method of writing? I have a presentation next week, annd I am at the search for such information.

  46. Have you ever considered publishing an ebook or guest authoring on other blogs?
    I have a blog based upon on the same topics you discuss and would love to have you share some stories/information. I know
    my readers would appreciate your work. If you are even remotely interested,
    feel free to shoot me an email.

  49. Hi, Neat post. There’s a problem together with your
    web site in internet explorer, might test this?
    IE still is the market leader and a huge portion of people will pass over your wonderful writing due to this problem.

  50. May I simply say what a relief to find someone who genuinely knows
    what they are talking about on the net. You certainly understand how to bring
    an issue to light and make it important. More and more people need to look
    at this and understand this side of your story.
    It’s surprising you’re not more popular since you most certainly have
    the gift.

Leave a Reply

Discover more from Small Business Paths

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

Continue reading