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But there’s a newer version of the IRA that’s only a few years old.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IRA contributions, as well as the growth of those contributions, will be subject to income tax when the money is withdrawn from the account.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Whatever you put in not only grows tax-free, but can also be withdrawn tax-free.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. Great web site you’ve got here.. It’s difficult to find high quality writing like yours nowadays.
    I seriously appreciate people like you! Take care!!

  5. Hello, i feel that i noticed you visited my blog so i got here to go back the want?.I’m
    attempting to to find things to enhance my website!I guess its ok to
    use some of your ideas!!

  12. Hello Dear, are you actuall visiting this web sote regularly, if so affter that
    you will without doubt get pleasant experience.

    Here is my web-site :: kripto

  14. Seccadeli Cami Halısı,görünümüyle seccadeyi andıran insanların sıkışıklık yaşamadan ibadet etmelerine olanak sağlayan halı türüdür. Bu sayede cemaatte bulunan bireyler ibadetleri esnasında şahıslarına ait seccadeleri var gibi rahat edeceklerdir. Ayrıca hem estetik hem de rahatlık sunmaktadır.

  15. Pingback: how to contact the illuminati

  16. Thanks for some other informative site. Where else may I get that kind of information written in such a perfect approach?
    I have a undertaking that I’m just now operating on, and I’ve been at
    the look out for such information.

  22. I am extremely impressed together with your writing skills as
    smartly as with the structure to your blog. Is this a paid subject matter or did you
    modify it yourself? Anyway keep up the excellent high quality writing, it’s rare to look a
    nice blog like this one nowadays..

    Look at my web-site; bodog sports betting

  26. Hello there! 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?

  39. Pingback: Trending news

  42. Thanks for the good writeup. It in reality was once a enjoyment account it.
    Glance complicated to more introduced agreeable from you!
    However, how can we keep up a correspondence?

  44. Link exchange is nothing else but it is just placing the other person’s webpage link on your page at appropriate place and
    other person will also do same for you.

  45. Pingback: Breaking Videos

  46. Yün halılar son derece düşük yanıcılık seviyelerine sahiptir ve güvenli, sağlıklı iç ortamlar yaratmak için en iyi seçimi temsil eder.Yün Cami HalısıTavus Halı olarak sizlerin beğenisine sunduğumuz yün cami halılarımız 0 saf yünden yapılmakta olup kaliteli bir işçiliği de sizlere sunmaktadır.WoolmarkWoolmark Sertifikası hem tüketicilere hem de tedarik zincirine elyaf içeriğini ve kalitesini garanti eden bir tekstil kalite güvencesi ve ürün belgelendirme ölçeğidir.Akrilik Cami HalısıAkrilik Cami halısı, akrilik elyaftan yapılmış bir halıdır ve sentetik bir malzemedir, yün gibidir bununla beraber oldukça ucuzdur.Tavus Halı Online KatalogSizin için hazırladığımız online kataloğumuzu incelediniz mi?Online Katalog İnceleİstiklal Mah. Kavaklıdere Cad. No:100/A Ümraniye / İSTANBUL 90 (236) 462 33 97 – 98info@tavus.com.trAnasayfaKurumsalÜrünlerReferanslarGaleriE-KatalogİletişimYün Cami HalılarıYün Duvardan DuvaraGöbekli Cami HalılarıAkrilik Cami HalılarıAkrilik Duvardan DuvaraBizi Takip Edin Copyright 2021 © TAVUS HALI PAZARLAMA SAN. TİC. LTD. ŞTİ

  47. Cami Halım, Gaziantep ve Demirci’de kendi fabrikasında, müşterilerine modern teknolojiyi kullanılarak üretilen cami halılarını yüzlerce renk ve desen seçenekleri ile sunmaktadır. Cami halısı sınırsız renk ve desen seçeneği ile cami mimarisine uygun en güzel deseni ve rengi birlikte seçiyoruz.

  48. Yeni eski her türlü ofis Mobilyası , mobilya ve beyaz eşyalarınızı değerinde alınır ve satılır. Profesyonel kadromuz ve araçlarımız ile satmak istediğiniz ürünleri kapınıza kadar gelip alıyoruz, satın aldığınız ürünleri de ücretsiz olarak kapınıza kadar teslim ediyor ve montajını yapıyoruz.

  49. Howdy very cool website!! Man .. Excellent .. Wonderful ..
    I will bookmark your web site and take the feeds additionally?
    I am happy to find so many helpful information here in the
    submit, we’d like work out extra strategies on this regard, thanks for sharing.
    . . . . .

  50. Uzman eğitmenlerimiz ile eğitimin öncüsüyüz. Özel eğitime gereksinimi olan çocuklarımızın okul-veli-öğretmen üçlüsü zincirinde ihtiyaçlarını belirleyip, bunların giderilmesi adına çalışmalar yapmaktayız. Sizler de bu eğitimlerden ücretsiz faydalanmak ister misiniz?

Leave a Reply

Discover more from Small Business Paths

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

Continue reading