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But there’s a newer version of the IRA that’s only a few years old.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IRA contributions, as well as the growth of those contributions, will be subject to income tax when the money is withdrawn from the account.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Whatever you put in not only grows tax-free, but can also be withdrawn tax-free.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!
It’s awesome to pay a quick visit this website and reading the
views of all mates about this article, while I am also zealous of getting know-how.
whoah this blog is excellent i like reading your posts. Stay up the great work!
You understand, a lot of people are hunting round
for this information, you can help them greatly.
Fine way of explaining, and good post to get information regarding my presentation subject matter,
which i am going to convey in university.
You ought to take part in a contest for one of the best websites online.
I will recommend this web site!
Hello my friend! I want to say that this article is
amazing, great written and include approximately all vital infos.
I’d like to see extra posts like this .
If you are going for best contents like myself, only go to see this site daily as
it offers quality contents, thanks
No matter if some one searches for his essential thing,
therefore he/she wishes to be available that in detail, thus that thing is maintained over here.
bookmarked!!, I love your website!
Asking questions are in fact good thing if you are not
understanding anything entirely, however this piece of writing provides fastidious understanding even.
There’s definately a lot to know about this issue.
I really like all the points you’ve made.
My web page BioLyfe Keto
Hey there! I just wish to give you a big thumbs up for your excellent info you have here on this post.
I will be coming back to your site for more soon.
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 informative to read?
Hey! Do you use Twitter? I’d like to follow you if that would be
okay. I’m undoubtedly enjoying your blog and look forward to new posts.
Link gift card exchange
is nothing else but it iis just placing the other
person’s web site link on ykur page at suitable place
and other persaon will also do same for you.
Pretty section of content. I just stumbled upon your web site and in accession capital to assert that I acquire actually loved account
your blog posts. Any way I’ll be subscribing in your feeds or even I success you get admission to persistently rapidly.
Hi, i feel that i noticed you visited my web site thus i got
here to return the desire?.I’m attempting to in finding issues to improve my web site!I assume its
good enough to use some of your ideas!!
Hi there very nice blog!! Guy .. Excellent ..
Wonderful .. I’ll bookmark your site and take the feeds additionally?
I am satisfied to find so many helpful information right here within the submit, we
want develop more strategies in this regard, thank you for sharing.
. . . . .
Ahaa, its good discussion on the topic of this paragraph here at
this web site, I have read all that, so now me also commenting here.
Does your website have a contact page? I’m having a tough time locating it but,
I’d like to shoot you an e-mail. I’ve got some ideas for your blog you might be interested in hearing.
Either way, great website and I look forward to seeing it
expand over time.
Everyone loves it when individuals come together annd
share ideas. Great site, keep it up!
Check out my web blog: Is Prodentim Vegan
Remarkable! Its really remarkable article, I have
got much clear idea concerning from this article.
It wasn’t till 2012 that the tate authorized casinos to hhost live poker gawmes and tournaments.
Alsso visit my web page – Extra resources
My brother recommended I might like this blog. He was totally right.
This post actually made my day. You cann’t imagine just how much
time I had spent for this info! Thanks!
After looking over a number of the articles on your web site, I seriously appreciate your technique of writing a blog.
I book marked it to my bookmark site list and will be checking
back in the near future. Please visit my
web site as well and let me know what you think.
If you wish to invest in Barbarian 2022, crunch your amounts.
Depending on where you are, solar energy panels could cost a lot when you have potential costs together with overhead costs.
He didn’t understand why the bird wanted to ride the bicycle. https://freshhaber.com/turk-kahvesi-yaparken-dikkat-edilmesi-gerekenler/
Hello, Neat post. There’s a problem together with your web site in internet
explorer, might test this? IE nonetheless is the market leader and a good element of other
folks will pass over your wonderful writing due to this problem.
I just couldn’t depart your web site before suggeting that
I extremely enjoyed the usual information a erson supply inn your visitors?
Is going too be back continuously to check uup on new posts
At that moment she realized she had a sixth sense. https://yardimcisaglikpersoneli.com/evde-kendi-kahve-makinanizi-yapin/
Please let me know if you’re looking for a author for your blog.
You have some really good posts and I feel 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. Cheers!
Definitely believe that which you stated.
Your favorite justification appeared to be
on the internet 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 as well as defined out the
whole thing without having side effect , people can take a signal.
Will probably be back to get more. Thanks
I like the helpful information you provide in your articles.
I will bookmark your weblog and ccheck again here frequently.
I’m quite sure I’ll learn many new stuff right here!
Good luck for thee next!
my page Mail Generator
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.
Fantastic beat ! I would like to apprentice whilst you amend your site, how can i subscribe for a
weblog web site? The account helped me a acceptable deal.
I have been tiny bit familiar of this your broadcast offered
brilliant clear idea
bbl İstanbul
lifta 20 mg eczane fiyatı en ucuz kampanyalı olarak tadalafil etken maddeli 36 saat etki süresi olan sertleştirici ve geciktirici ilaç eczane satış sitesinden sipariş verebilirsiniz. thank you so much. Lifta 20 mg fiyat Thanks for sharing.
pvc şerit perde