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But there’s a newer version of the IRA that’s only a few years old.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IRA contributions, as well as the growth of those contributions, will be subject to income tax when the money is withdrawn from the account.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Whatever you put in not only grows tax-free, but can also be withdrawn tax-free.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 have been browsing on-line greater than three hours nowadays, yet I never discovered any attention-grabbing article like yours.
It is beautiful worth enough for me. In my view, if all website owners and bloggers made
excellent content material as you did, the net will be much more useful than ever before.
I don’t unremarkably comment but I gotta admit thank
you for the post on this special one :D.
my web site poker
This paragraph will help the internet viewers for building up new webpage or even a blog from start to end.
I read this post completely concerning the comparison of newest and earlier technologies,
it’s awesome article.
Awesome post.
I have read so many posts about the blogger lovers but this article is genuinely a fastidious paragraph, keep it up.
Howdy this is somewhat of off topic but I was wanting to know if blogs
use WYSIWYG editors or if you have to manually code
with HTML. I’m starting a blog soon but have no coding skills
so I wanted to get advice from someone with experience. Any help
would be enormously appreciated!
Thank you, I have recently been searching for information about this subject for ages and yours is the best I’ve came upon till now.
However, what about the bottom line? Are you certain concerning the supply?
Hello there, just became aware of your blog through Google, and
found that it’s really informative. I?m gonna watch out for brussels.
I?ll appreciate if you continue this in future. Many people will be benefited from your
writing. Cheers!
Check out my homepage; gamsat practice tests tips
It’s an awesome piece of writing for all the online visitors; they
will take benefit from it I am sure.
Way cool! Some extremely valid points! I appreciate you
penning this write-up and also the rest of the website is really good.
Also visit my web page exam hall
Right here is the perfect web site for everyone who wishes to find out
about this topic. You know so much its almost
hard to argue with you (not that I really would
want to…HaHa). You definitely put a fresh spin on a topic that
has been discussed for ages. Excellent stuff, just excellent!
If some one wishes to be updated with hottest
technologies then he must be visit this web site and be up to date every day.
Aw, this was a very nice post. Taking the time
and actual effort to produce a top notch article… but what can I say…
I put things off a lot and never manage to get nearly anything done.
This blend comes from 100% Arabica beans that meet Dunkin’s strict requirements for rising
and selecting.
Excellent post. I was checking constantly this weblog and I’m
inspired! Very useful information specially the last phase 🙂 I handle such info
a lot. I was looking for this certain info for
a very lengthy time. Thank you and good luck.
Hugh Grant stole every scene in The Gentlemen, and he
just might do it again in the role of billionaire arms dealer
Greg Simmonds.
I every time emailed this website post page to all my friends, because if like to
read it then my contacts will too.
Post writing is also a excitement, if you be acquainted with then you can write if not it
is difficult to write.
Feel free to surf to my page pmp certification exam (Candace)
constantly i used to read smaller posts that as well clear their motive, and that is also happening with this piece of writing
which I am reading at this place.
Feel free to visit my site :: afqt exam (Wendy)
These are genuinely enormous ideas in about blogging.
You have touched some pleasant factors here. Any way keep up
wrinting.
My web-site roofing contractor miami fl
Hi, i think that i saw you visited my web site thus i came to “return the
favor”.I am attempting to find things to enhance my web site!I suppose its ok to
use a few of your ideas!!
Your style is unique compared to other people I’ve read stuff from.
I appreciate you for posting when you have the opportunity, Guess I will just
bookmark this blog.
Great post. I am going through some of these issues as well..
In January 2021, the movie was delayed again, first to October
8, 2021, after which to January 21, 2022, when No Time to Die was moved to the October 2021 date.
Please let me know if you’re looking for a writer for your blog.
You have some really good posts and I believe 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 blast me an e-mail if interested.
Regards!
magnificent issues altogether, you just received a brand new reader.
What would you suggest about your post that you just
made some days ago? Any certain?
Woah! I’m really digging the template/theme of this blog.
It’s simple, yet effective. A lot of times it’s very difficult to
get that “perfect balance” between user friendliness and visual appeal.
I must say you’ve done a excellent job with this. In addition, the blog loads very quick
for me on Chrome. Excellent Blog!
Attractive portion of content. I simply stumbled upon your website and in accession capital to
claim that I get in fact enjoyed account your weblog posts.
Anyway I will be subscribing for your augment or even I fulfillment you get admission to
persistently fast.
Thanks for any other magnificent article.
The place else could anybody get that kind of info in such
a perfect way of writing? I’ve a presentation next week, and I am on the look for such
information.
This blog was… how do I say it? Relevant!! Finally I’ve found something that helped
me. Cheers!
Please let me know if you’re looking for a
writer for your blog. You have some really great articles and I think 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 shoot me an email if interested. Thanks!
Nowadays Narayan writes about films, TV reveals, comic books and video games, or
about anything associated to The Witcher.
Aw, this was a really nice post. Taking the time and actual effort to generate a superb article… but what can I say… I put things off a whole lot and don’t seem
to get nearly anything done.
Also visit my blog :: 사다리사이트 검증
Fantastic goods from you, man. I’ve understand your stuff previous to and you
are just too great. I actually like what you’ve acquired here, really like
what you’re saying and the way in which you say it. You make it enjoyable and you still take care of to keep
it smart. I can’t wait to read much more from you.
This is really a great web site.
It’s an amazing post designed for all the web visitors; they will get
benefit from it I am sure.
I for all time emailed this website post page to all my friends, because if like to read
it next my friends will too.
Yes! Finally something about austin wedding photographer.
hello!,I really like your writing so so much! percentage
we be in contact extra about your article on AOL?
I need an expert on this house to resolve my problem.
May be that’s you! Having a look ahead to look you.
When someone writes an article he/she maintains the thought of a user in his/her mind that
how a user can be aware of it. Therefore that’s why this piece of writing is great.
Thanks!