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But there’s a newer version of the IRA that’s only a few years old.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IRA contributions, as well as the growth of those contributions, will be subject to income tax when the money is withdrawn from the account.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Whatever you put in not only grows tax-free, but can also be withdrawn tax-free.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!
You’re so cool! I do not think I have read through a single thing like that
before. So wonderful to discover another person with a few unique thoughts on this subject.
Really.. thanks for starting this up. This web site is one thing that’s
needed on the web, someone with a little originality!
Hello, of course this piece of writing is in fact
nice and I have learned lot of things from it on the topic of blogging.
thanks.
Otherwise I love the app, use it lots, it is very helpful and in my
opinion the app is even higher than the actual website.
I love the details on your websites. Cheers!
restolin review https://restolinreview.com
Fastidious answers in return of this difficulty with firm arguments and explaining everything regarding that.
Appreciating the dedication you put into your website and in depth information you provide.
It’s nice to come across a blog every once in a while that isn’t the same old rehashed information. Wonderful read!
I’ve bookmarked your site and I’m adding your RSS feeds
to my Google account.
It’s actually a great and helpful piece of information. I’m happy that you simply shared this helpful information with us.
Please stay us informed like this. Thanks for sharing.
I am not sure where you’re getting your information, but great topic.
I needs to spend some time learning more or understanding more.
Thanks for magnificent info I was looking for this info
for my mission.
Thank you for the good writeup. It in fact was a
amusement account it. Look advanced to far added agreeable from you!
By the way, how can we communicate?
Go to the odd comparison screen and pick out your acceptable bet with the Rapid Bet
symbol.
I am regular reader, how are you everybody? This piece of writing posted at this web site
is genuinely good.
What you composed made a bunch of sense. But, what about this?
suppose you added a little content? I am not saying your content is not solid.,
however what if you added something that makes people want more?
I mean The Easy And Legal Way To Turn Taxable Income Into Tax-Free Income – Small Business Paths is a little vanilla.
You ought to glance at Yahoo’s home page and watch how they
create post titles to grab viewers interested. You might try adding a video or a related picture or two to get readers excited about
everything’ve got to say. In my opinion, it could make
your posts a little bit more interesting.
It’s fantastic that you are getting ideas from this article as well as
from our discussion made at this place.
Howdy, i read your blog from time to time and i own a
similar one and i was just curious if you get a lot of spam remarks?
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 assistance is very much appreciated.
Everything is very open wiith a very clear clarrification oof
the issues. It was truly informative. Your site is
useful. Many thaanks for sharing!
First off I would like to say terrific blog! I had a quick
question in which I’d like to ask if you do not mind. I was curious to know how you
center yourself and clear your mind prior to
writing. I’ve had a difficult time clearing
my mind in getting my ideas out. I do enjoy writing however it just seems like the first 10
to 15 minutes tend to be lost simply just trying to
figure out how to begin. Any recommendations or tips? Cheers!
bookmarked!!, I love your website!
I visited various web sites except the audio quality for audio songs existing at
this web site is really wonderful.
Can I simply just say what a comfort to uncover somebody that really knows what they are talking about on the internet.
You certainly understand how to bring an issue to light and make it important.
A lot more people must read this and understand this side
of your story. I was surprised you’re not more popular because
you most certainly possess the gift.
What’s up, after reading this amazing post i am too glad to share
my experience here with friends.
For most recent information you have to visit web and on world-wide-web
I found this web site as a best web site for hottest updates.
I would like to thnkx for the efforts you have put in writing this
blog. I am hoping the same high-grade web site post from
you in the upcoming as well. Actually your
creative writing abilities has encouraged me to get my own web site now.
Really the blogging is spreading its wings fast. Your write up is a good example of it.
Highly descriptive blog, I enjoyed that bit. Will there be a part 2?
Great post however I was wondering if you could write a litte more on this topic?
I’d be very thankful if you could elaborate a little bit
more. Kudos!
I was recommended this blog by my cousin. I am not sure whether this post is written by him as no one else
know such detailed about my trouble. You’re incredible!
Thanks!
magnificent points altogether, you simply gained a new reader.
What might you recommend in regards to your put up that you simply made some days ago?
Any sure?
It’s great that you are getting ideas from this piece of writing as well as from our discussion made at this
time.
Pretty nice post. I just stumbled upon your weblog and wished to say that I’ve truly enjoyed browsing your blog posts.
After all I’ll be subscribing to your feed and I hope you write again soon!
You should take part in a contest for one of the highest quality
blogs on the internet. I will recommend this site!
Hmm it looks like your site 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 too am an aspiring blog blogger but I’m still new to the whole thing.
Do you have any tips and hints for newbie blog writers?
I’d definitely appreciate it.
Take a look at my blog – 온라인바카라사이트
I do not know if it’s just me or if perhaps everyone else experiencing issues with your website.
It seems like some of the written text in your content are running off the screen. Can somebody else please
comment and let me know if this is happening to them too?
This might be a problem with my browser because I’ve had this happen before.
Kudos
I’m also writing to let you be aware of of the brilliant experience my friend’s girl experienced going
through your blog. She learned several details, with the inclusion of what it is like to have a marvelous teaching heart to let others really
easily know various tortuous subject areas. You really exceeded people’s
expected results. I appreciate you for offering the informative,
trusted, educational and in addition cool guidance on the topic to Mary.
Also visit my blog – mcse career path [we.riseup.net]
I quite like looking through a post that will make people think.
Also, thank you for allowing me to comment!
I am sure this post has touched all the internet visitors, its really really fastidious paragraph on building up new blog.
I need to to thank you for this fantastic read!! I certainly loved
every bit of it. I’ve got you book marked to check out new things you post…