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But there’s a newer version of the IRA that’s only a few years old.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IRA contributions, as well as the growth of those contributions, will be subject to income tax when the money is withdrawn from the account.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Whatever you put in not only grows tax-free, but can also be withdrawn tax-free.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:
Learn from this resource or other sources and go for it!
I really like your blog.. very nice colors & theme.
Did you make this website yourself or did you hire someone to do it for you?
Plz answer back as I’m looking to design my own blog and would like
to find out where u got this from. thank you
Hey there would you mind letting me know which webhost
you’re using? I’ve loaded your blog in 3 completely different web browsers and I must say
this blog loads a lot faster then most. Can you
recommend a good internet hosting provider at a honest price?
Kudos, I appreciate it!
Hey very nice website!! Man .. Excellent .. Amazing ..
I will bookmark your web site and take the feeds additionally?
I’m glad to find a lot of useful information here within the publish, we want develop more techniques in this regard, thanks for sharing.
. . . . .
Howdy! I just wish to offer you a big thumbs up for your excellent info you’ve got here
on this post. I am returning to your blog for more soon.
Paragraph writing is also a fun, if you be acquainted with after that you can write if not it is
difficult to write.
Hi there! This post couldn’t be written much better! Looking through this post reminds me
of my previous roommate! He always kept talking about
this. I am going to forward this information to him. Fairly certain he’ll have a good read.
Many thanks for sharing!
Thanks for every other magnificent post. The place else could anyone get that type
of information in such a perfect approach of writing? I’ve a presentation next week, and I’m on the look for such information.
Please let me know if you’re looking for a article author for your site.
You have some really good posts and I think I would be
a good asset. If you ever want to take some of the load off, I’d absolutely love to write some
articles for your blog in exchange for a link back to mine.
Please shoot me an email if interested. Cheers!
We’re a group of volunteers and starting a new scheme in our community.
Your web site provided us with valuable information to work on. You’ve done a formidable job and our
whole community will be grateful to you.
Hello my friend! I wish to say that this post is amazing,
great written and come with approximately all vital infos.
I’d like to peer extra posts like this .
Every weekend i used to pay a visit this web page, because i
want enjoyment, for the reason that this this web
page conations really pleasant funny information too.
I like what you guys are up too. This type of clever work and exposure!
Keep up the excellent works guys I’ve incorporated
you guys to blogroll.
Hello, all the time i used to check weblog posts here in the early hours in the break of day, since i enjoy to find out more and more.
When hunting at NBA Betting odds at BetAmerica, you will see the names of
the two teams playing, the spread, the moneyline, and the total.
Tremendous issues here. I’m very glad to look your post.
Thank you a lot and I am looking forward to touch you.
Will you please drop me a e-mail?
A motivating discussion is worth comment. I do believe that you need to publish
more on this topic, it might not be a taboo subject but generally people do not speak about these issues.
To the next! Kind regards!!
I enjoy you because of all of the efforts on this web page.
My aunt delights in setting aside time for internet research and it is obvious
why. Almost all hear all of the compelling manner you deliver good tricks by means of this website and in addition cause participation from people
on this content while my daughter is really being taught so much.
Take advantage of the remaining portion of the year.
You are doing a good job.[X-N-E-W-L-I-N-S-P-I-N-X]I am really inspired with your writing skills and also with the structure for your weblog.
Is this a paid topic or did you customize it yourself?
Either way stay up the excellent high quality writing,
it is uncommon to peer a nice weblog like this one these days.
Review my page … pmp simulator
Doch insgesamt lohnt sich der Kauf, denn die Immobilie steigert
ihren Wert und am Ende besitzt der Käufer seine eigene Immobilie als Vermögensanlage.
So lässt sich dann wiederum Geld mit Immobilien verdienen. Dabei zahlt er dann nur noch die Instandhaltungskosten, während der Mieter weiterhin Miete und Nebenkosten zahlen muss.
Zusammenfassend lohnt sich der Kauf einer Immobilie und das Geld
in Immobilien investieren, wenn die Kreditwürdigkeit gegeben ist und der Fokus auf einer langfristigen Planung liegt.
Mit einem Kredit oder genügend Eigenkapital lässt sich zudem auch eine Wohnung oder ein Haus als Mietobjekt kaufen. Wichtig ist
hierbei jedoch, dass ein besonderer Fokus auf der Objektbewertung liegt.
Denn nur wenn die Wohnung oder das Haus qualitativ überzeugen können und keine groben Mängel aufweisen, lässt sich mit den Immobilien Geld
verdienen. Das Ziel ist dabei, einen positiven Cash-Flow zu generieren. Dass bedeutet,
dass nach Abzug aller Kosten und Steuern von der Kaltmiete
jeden Monat ein Überschuss vorhanden ist.
Wow, this paragraph is good, my sister is analyzing such things,
therefore I am going to tell her.
Howdy! Do you know if they make any plugins to protect against hackers?
I’m kinda paranoid about losing everything I’ve worked hard on. Any recommendations?
I do trust all the ideas you have presented for
your post. They’re very convincing and can certainly work.
Still, the posts are too brief for novices. May you please lengthen them a
little from subsequent time? Thank you for the post.
When someone writes an piece of writing he/she retains the
plan of a user in his/her brain that how a user can know it.
Therefore that’s why this paragraph is outstdanding. Thanks!
Hello, i read your blog from time to time and
i own a similar one and i was just wondering if you get a lot of spam responses?
If so how do you reduce it, any plugin or anything you can recommend?
I get so much lately it’s driving me insane so any help is very much appreciated.
Hi to every body, it’s my first pay a quick visit of this webpage; this webpage contains remarkable and truly good data in support of visitors.
The last season of the comedy coming-of-age collection created by Robia Rashid.
What’s up, yeah this article is genuinely fastidious and I have
learned lot of things from it concerning blogging. thanks.
Now I am going away to do my breakfast, afterward having my breakfast coming yet again to read other news.
Heya i’m for the first time here. I came across this board and I in finding It really useful & it helped me out a lot.
I’m hoping to offer something back and aid others
like you aided me.
I’ll right away snatch your rss as I can not to find your email subscription hyperlink
or newsletter service. Do you’ve any? Please let me understand so
that I may subscribe. Thanks.
If you are going for finest contents like me, simply go to see
this web page everyday because it gives feature contents, thanks
I always spent my half an hour to read this blog’s articles all the
time along with a mug of coffee.
Hi, after reading this remarkable article i am too delighted to share my know-how
here with friends.
Hey There. I found your weblog using msn. That is an extremely smartly written article.
I’ll be sure to bookmark it and return to read extra of your useful info.
Thanks for the post. I’ll definitely return.
Awesome! Its really remarkable article, I have got much clear idea on the topic of from this
post.
Yesterday, while I was at work, my sister stole my apple
ipad and tested to see if it can survive a twenty five foot drop, just so
she can be a youtube sensation. My apple ipad is now
destroyed and she has 83 views. I know this is entirely
off topic but I had to share it with someone!
I am regular reader, how are you everybody? This paragraph posted
at this website is actually pleasant.
This piece of writing will help the internet visitors for creating new blog or even a weblog from start to
end.
We stumbled over here coming from a different page and thought
I might as well check things out. I like what I see so i am just
following you. Look forward to finding out about your web page for a second time.
Great work! That is the type of information that should be shared across
the internet. Shame on the search engines for no longer positioning this publish higher!
Come on over and visit my site . Thank you =)
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.
hello!,I love your writing very a lot! proportion we keep in touch more about your post on AOL?
I need an expert on this space to unravel my problem.
Maybe that is you! Taking a look forward to peer you.
What’s up it’s me, I am also visiting this
web site regularly, this website is in fact nice
and the visitors are genuinely sharing fastidious thoughts.
Wow, superb blog structure! How long have you ever
been running a blog for? you made blogging glance
easy. The overall look of your web site is excellent, as smartly as the content!
As a newbie to copywriting this is an absolute game-changer.
What’s up to all, it’s in fact a nice for me to pay a visit
this site, it contains valuable Information.