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But there’s a newer version of the IRA that’s only a few years old.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IRA contributions, as well as the growth of those contributions, will be subject to income tax when the money is withdrawn from the account.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Whatever you put in not only grows tax-free, but can also be withdrawn tax-free.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!
whoah this weblog is excellent i like studying your posts.
Keep up the good work! You know, lots of people are searching around for this info,
you could help them greatly.
Thanks on your marvelous posting! I truly enjoyed reading it, you’re a
great author.I will remember to bookmark your blog
and will come back in the foreseeable future. I want to encourage you to continue your great writing, have a nice evening!
Bültene üye olun.
Mimar Sinan’ın eserlerinden olan camide Tavus Halı kalitesi…
I like reading your posts. very good blog! If you are interested to know who is the best business coach in the world My web site: best business coach in the world
Yün Duvardan DuvaraGöbekli Cami HalılarıAkrilik Cami HalılarıAkrilik Duvardan DuvaraYün Cami HalılarıYün Cami Halısı – Kaliteli ve Sağlıklı Modeller | TavusBirbirinden kaliteli ve sağlıklı 100% yün cami halısı modelleri, fiyat ve hızlı teslimat avantajlarıyla Tavus Halı’da!İstanbul Maltepe Mevlana CamiCS-1453-GÜLKURUSUCS-1453-GÖKMAVİCS-1453-KİREMİTCS-1453-NATURELCS-1453-KIRMIZICS-1453-TURKUAZCS-1453-YEŞİLCS-2009-GÜLKURUSUCS-2009-GÖKMAVİCS-2009-KİREMİTREFERANSLARBİZİ TERCİH EDENLER
I just couldn’t go away your web site before suggesting that
I actually enjoyed the standard info an individual provide in your visitors?
Is gonna be back ceaselessly to investigate cross-check new posts
Thank you a lot for sharing this with all folks you really recognize what you are talking about!
Bookmarked. Please additionally discuss with my site =).
We may have a link exchange contract among us
Remarkable! Its actually amazing post, I have got
much clear idea regarding from this piece of
writing.
I truly love your website.. Very nice colors & theme. Did you develop this website yourself?
Please reply back as I’m hoping to create my own personal website and would love to learn where you got this from or just what the theme
is named. Thanks!
DOKUMA CAMÄ° HALISI
Undeniably believe that which you stated. Your favorite reason appeared to be on the net the easiest thing to be aware of.
I say to you, I definitely get irked 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 could take a signal.
Will probably be back to get more. Thanks
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.
Write more, thats all I have to say. Literally, it seems as though you relied on the
video to make your point. You definitely know what youre talking about, why waste your intelligence on just posting videos to your weblog
when you could be giving us something enlightening to read?
Hi everyone, it’s my first pay a quick visit at this website,
and piece of writing is truly fruitful designed for me, keep up posting such articles.
Keep on working, great job!
Yes! Finally someone writes about have a peek at
this web-site.
Woah! I’m really enjoying 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 usability and appearance.
I must say you’ve done a awesome job with this.
In addition, the blog loads super fast for me on Internet explorer.
Excellent Blog!
child porn
After reading the article, I added your blog to my bookmark list. My web site: vintage magazine cover
buy haclink
I simply could not go away your website before suggesting that
I really loved the usual info a person provide to
your visitors? Is going to be back incessantly to check up on new
posts
my blog post – rb88
instagram followers
When someone writes an post he/she keeps the image of a user
in his/her mind that how a user can understand it. So that’s why this
paragraph is outstdanding. Thanks!
Great article, just what I wanted to find.
Hi to every body, it’s my first pay a quick visit of this
blog; this weblog contains amazing and in fact excellent stuff designed for visitors.
Just what I was searching for, thanks for putting up.
My blog: Lavelle Derma Age Defying Cream
Howdy this is kind of of off topic but I was wondering if blogs use
WYSIWYG editors or if you have to manually code witth HTML.
I’m starting a blog soon but have no coding knowledge so I
wanted to get advic from someone with experience.
Anyy help would be enormously appreciated!
Alsso visit my homepage – php scriptler
It’s enormous that you are getting ideas from this article as well as from our
discussion made at this time.
My relatives all the time say that I am killing my time here at
web, but I know I am getting know-how daily by reading such pleasant
articles or reviews.
Hello, I enjoy reading through your article post. I wanted
to write a little comment to support you.
Thanks for sharing your thoughts. I really appreciate your efforts and I
am waiting for your further write ups thank you once again.
I like this blog very much, Its a rattling nice place to read
and obtain information.
Here is my blog post: bocoran rtp live
I was recommended this website via my cousin. I’m no longer sure whether or not this submit is written by means of him as nobody else recognise such designated approximately my trouble.
You’re wonderful! Thank you!
always i used to read smaller articles or reviews which as well
clear their motive, and that is also happening with this paragraph which I am reading at this place.
Greetings! Very useful advice within this post!
It’s the little changes which will make the greatest changes.
Thanks a lot for sharing!
Hello, I enjoy reading through your article. I wanted to
write a little comment to support you.
Hi, I read your blogs daily. Your writing style is witty, keep doing what you’re doing!
It’s difficult to find knowledgeable people in this particular topic, but you seem like you know
what you’re talking about! Thanks
Hello There. I found your blog the usage of msn. That is a really smartly written article.
I will be sure to bookmark it and come back to read more of your useful information. Thanks for the post.
I will definitely comeback.
Check out my site :: rb888