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But there’s a newer version of the IRA that’s only a few years old.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IRA contributions, as well as the growth of those contributions, will be subject to income tax when the money is withdrawn from the account.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Whatever you put in not only grows tax-free, but can also be withdrawn tax-free.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. Do you mind if I quote a couple of your posts as long
    as I provide credit and sources back to your weblog?

    My blog is in the very same niche as yours and my users would
    definitely benefit from some of the information you provide here.
    Please let me know if this ok with you.
    Regards!

  2. I need to to thank you for this wonderful read!!

    I definitely loved every bit of it. I have got you bookmarked to look at new things you post…

  4. I made use of to be 1 of the hashish addicts who were wasting his everyday living.
    I counted years to get the braveness to ultimately acknowledge the problem and search for assist.
    The good news is, I identified a impressive technique to help me give up for superior.

    The procedure is extensive and complicated but I have summoned all my willpower to do encounter them
    difficulties so I could ultimately cost-free myself from the habit.
    It takes a great deal of resolve and huge doses of encouragement and moral assistance to do it.
    It is mind-boggling to listen to about willpower but it is that anything that could really spell good results or failure in this
    endeavor.

    Summoning willpower is not about some superhero electricity that will struggle the evil.
    It is about taking your reason to coronary heart and enabling that to push you in direction of your goal
    of getting clean up. Summoning your willpower is calling on to your interior toughness and capitalizing on the strength your loved ones
    are giving you by means of the total method.

    Everyday we all make decisions that have an affect on how our
    day will convert out. There are smaller items we have uncertainties about like what color
    you need to put on or no matter if you can remedy your lousy hair day or not.
    These are little things that will pinch you a bit if you select unwisely.
    And then there are the biggies that could truly shake points up in your lifetime – like
    operating absent from a wedding or submitting
    an indefinite leave from your career. These conclusions produce
    waves that transfer you, displace you. What you decide on could considerably affect other factors
    of your daily life. The magnitude of the impression depends on how major the
    selection is.

    For hashish addicts, this could be as significant as ultimately placing on the breaks
    on cigarette smoking pot. This is a single huge conclusion that ought to be made with complete
    willpower. Just about every inch of your physique should really be saying certainly in unison –
    with out hesitation.

    Declaring indeed to quitting is the really first phase soon after you have acknowledged the existing trouble.

    I have programmed myself to realize success. I have stated sure to a new lifestyle and I am not going to fall short.

    Placing your complete heart and thoughts powering this final decision will support you by the hurdles.
    Forget about about how content or fulfilled you felt when you smoked pot.

  7. So if you’re expecting a great deal of help, be aware that this isn’t always forthcoming.
    Cross out any irrelevant ones to make your very best to put them
    right into a logical order. If you say because repeatedly, one and only thing people is
    going to be alert to happens because – it’ll stifle your argument
    and it’s also at the top of their email list of things you should avoid with your academic
    work.

  17. Hi there, I discovered your site by way of Google while
    looking for a related topic, your website came up, it appears great.
    I’ve bookmarked it in my google bookmarks.
    Hello there, simply changed into aware of your weblog via Google, and found that it is really informative.

    I’m gonna be careful for brussels. I will appreciate for those who proceed this in future.
    Numerous other people can be benefited from your writing.
    Cheers!

  19. Excellent site you have here but I was curious about if you knew of any discussion boards that cover
    the same topics talked about here? I’d really like to be a part of
    online community where I can get opinions from other knowledgeable
    individuals that share the same interest. If you have any recommendations, please let
    me know. Thank you!

  22. An impressive share! I have just forwarded this onto a
    colleague who has been conducting a little research
    on this. And he in fact bought me breakfast simply
    because I stumbled upon it for him… lol. So allow me to reword this….
    Thank YOU for the meal!! But yeah, thanks for spending some time to
    discuss this topic here on your internet site.

  26. I all the time used to study article in news papers but now as I am a
    user of internet therefore from now I am using
    net for content, thanks to web.

  27. It’s appropriate time to make a few plans for the longer term
    and it’s time to be happy. I’ve learn this post and if I may just I want
    to recommend you few attention-grabbing issues or advice.
    Perhaps you can write subsequent articles regarding this article.

    I desire to read more things about it!

  28. Today, I went to the beachfront with my children. I found a sea shell and gave it to my 4 year old daughter and said “You can hear the ocean if you put this to your ear.” She placed the shell to her ear and screamed.
    There was a hermit crab inside and it pinched her ear.
    She never wants to go back! LoL I know this
    is entirely off topic but I had to tell someone!

  29. I made use of to be just one of the cannabis addicts who were losing his lifestyle.
    I counted decades to get the bravery to at last admit the difficulty and seek help.
    Luckily, I discovered a powerful approach to support me quit for very good.
    The approach is long and hard but I have summoned
    all my willpower to do confront them challenges so I could lastly no cost myself from the dependancy.
    It normally takes a large amount of willpower and huge
    doses of encouragement and moral help to do it. It is overwhelming to hear about willpower but it is that a little something that could truly
    spell achievements or failure in this endeavor.

    Summoning willpower is not about some superhero power that will battle the evil.
    It is about using your intent to heart and
    making it possible for that to drive you towards your
    aim of being clean. Summoning your willpower is calling on to your interior toughness and capitalizing on the
    energy your cherished kinds are offering you through the whole course of action.

    Each day we all make selections that affect how our working day will transform out.
    There are compact issues we have doubts about like what color you must don or no matter whether you can cure your undesirable hair day or not.
    These are little matters that will pinch you a little bit if you pick unwisely.
    And then there are the biggies that could really shake matters up in your life – like operating away from a
    wedding day or filing an indefinite leave from your career.
    These choices produce waves that move you, displace you.
    What you choose on could significantly have an impact on other factors of your lifestyle.
    The magnitude of the affect relies upon on how major the choice is.

    For hashish addicts, this could be as massive as last but not least placing on the breaks on using tobacco pot.

    This is just one large choice that must be produced with total
    willpower. Each inch of your human body should really be expressing sure in unison – with
    no hesitation.

    Stating indeed to quitting is the very to start with move immediately after you have acknowledged
    the existing problem. I have programmed myself to realize success.
    I have stated indeed to a new existence and I am not going to fall short.
    Putting your total coronary heart and thoughts powering this choice will assistance
    you as a result of the obstructions. Forget about how happy or
    fulfilled you felt when you smoked pot.

  31. Remember the online has probable to deemed a powerful multimedia
    experience. It is possible to place for the use of music to
    contribute off to the right atmosphere? Moving your audience
    just takes a little supposed. Let your mind think
    outside of what is definitely being handled. I am not talking about traditional stuff
    here, like putting a flash commercial on website is. Extend your creativity and
    be original. Does your solution offer a solution to people’s problems?
    Is there a way that it can easily be promoted with a difficult angle into it for greater impact?

    Neuragen PN nerve Alleviation (.17 oz) — -worth the money ?
    at Walgreens for $19.99, with a $19.99 rebate form printing
    at the register. Stack this $5 off Neuragen coupon (you’ll need to get in in bonus coupon XJKBW3 of the registration page) with
    this $10 off Walgreens coupon (this link takes one to the digital edition of Walgreens’ Diabetes & You magazine, so you’ll want to scroll right through to find the coupon. You’ll pay $4.99 at the register, then you can certainly submit with
    regard to $19.99 discount!

    Go to the library once when your young ones are little ones.
    Allow them to select books that seem interesting to them, regardless of
    how old substantial. This is a easy way help kids feel actually important to the reading process, even when they can’t yet read books
    by themselves. There are abebooks coupon codes available.

    Third, a guest who has been treated well will state others and very you’ll have an overabundance
    guests. Money that is enjoyed, spent, circulated or given will attract
    More. Actually, it’s your attitude of enjoyment, pleasure, excitement or delight with
    money that draws MORE money to you will.

    Barnes & Noble or Bath & Body Works Gift Certificates – We all
    finally get some rare and treasured down time, nothing helps a
    busy Mom escape life’s daily pressures love a good book and
    a bubble bath. I can feel the tension calm down just by thinking about hanging a do not
    disturb to stay the bathroom door! You can often get gift cards at the lowest price
    on Cardavenue – an online marketplace to buy, sell and
    trade pre-owned gift cards and gift cards!
    For more details, visit.

    Fruits and vegetables acknowledged to be very short of calories.
    According to the Negative Calorie theory, they probably will not
    even contain any calories at all and can certainly help you burn calories.
    A serving of meat can often be about 300 to 400 calories
    per serving and most people eat it having a grain, for rice or pasta, and vegetables.
    By skipping on the meat, you are going to cutting a quality deal of calories by the daily
    food plan. Also keep as their intended purpose that completely not be
    eating meat from fast Lulus, that is cut thousands of calories via your
    wight lost.

    People nonetheless having movie nights at home, having said that they are
    learning it differently compared to what they did just seconds away .
    few short years prior. Instead of visiting the video store over the way
    home from work, they are selecting movies using self-serve kiosks at gas stations or fast Lulus.
    Or they always be browsing electronically through their computers and televisions.

    Watching movies inside your own home has changed drastically within a very short period of time!

    Bundling also gets you faster service or more channels cheaper.
    Frequently when you bundle services together you avoid activation fees or long lasting contracts also.
    Free equipment is another frequent perk preference sign up online.

    This should be only one of the many incentive you seem for utilized Navy promo code.
    Once you are willing to get a one promo code, you can give it away within your friends which they too can enjoy shopping from the established
    designer brand. As such, could certainly make confident that
    you have a good shopping experience when you’ve got buy all of them.

    You can all the same expect to earn to as much as
    $100 in promo cards, get a cost-free marketing tool DVR you can obtain record your favorite shows and 3 months of HBO and Cinemax offering you combine it with your
    bundle when you order. Keep phone service just the way is, make this happen .
    make out like a bandit. There’s really no long term contract often.

    Instead of hitting simple . fast food restaurant and grabbing a burger, select a salad the.
    Go for grilled compared to fried. Bring some snack foods (nuts or seed,
    dried or fresh fruit, or whole grain crackers) in a
    home office so possess to control over what you eat.

    12. Shop at dollar stores. Cleaning supplies,
    shampoo and toothpaste, cereal and snacks (check the package expiration dates),
    and aspirin and band-aids are one of several better buys at neighborhood library dollar maintain.

    11. Avoid drive-thrus and wasting gas while car or truck is idling.
    Park your automobile outside and walk set for
    transactions in the bank, fast Lulus, and so. One additional advantage is the exercise you’ll have
    (assuming, of course, it’s not raining animals out an individual don’t want to
    walk through 3 foot snow drifts to do this).

  32. Hi there! This is my 1st comment here so I just wanted to give a quick shout out and tell you I really
    enjoy reading through your blog posts. Can you recommend
    any other blogs/websites/forums that cover the same topics?
    Thanks for your time!

  34. Тhanks for sharing superb informations. Ⲩour web-site iѕ reallｙ cool.
    І’m amazed by thе details that уou haѵe on this site.
    Ιt reveals һow nicely somｅone perceives this subject.
    Bookmarked tһis web pаge, will cߋmе Ƅack fоr moгe posts.
    You, mｙ good friend, ROCK!

  39. I utilized to be 1 of the cannabis addicts who were being squandering his daily life.
    I counted decades to get the braveness to last but not least
    confess the trouble and find assist. Fortunately, I
    found a strong system to support me give up for great. The
    method is prolonged and hard but I have summoned all my willpower to do experience them worries so I could last but not least cost-free myself from the addiction.
    It takes a good deal of dedication and significant doses of encouragement and
    ethical assistance to do it. It is mind-boggling to hear about willpower but it is that some thing that could seriously spell results or failure in this endeavor.

    Summoning willpower is not about some superhero power that will combat the evil.

    It is about getting your purpose to coronary heart and allowing that to
    travel you in direction of your intention of currently being thoroughly clean. Summoning your willpower
    is contacting on to your inner strength and capitalizing on the
    energy your liked types are giving you by means of the total approach.

    Everyday we all make conclusions that have an effect on how our
    day will switch out. There are tiny matters we have doubts about like what color you ought to have on or no matter if you can treatment your bad hair working day or not.
    These are little matters that will pinch you a little bit if you opt for unwisely.

    And then there are the biggies that could truly shake matters up
    in your lifestyle – like managing absent from a wedding ceremony or
    submitting an indefinite depart from your task. These choices build waves that shift
    you, displace you. What you choose on could greatly affect
    other facets of your everyday living. The magnitude of the impression depends on how major
    the decision is.

    For hashish addicts, this could be as huge as at last placing on the breaks on smoking cigarettes pot.
    This is a person substantial determination that should really be made with total
    dedication. Each individual inch of your system ought to be indicating of
    course in unison – with out hesitation.

    Declaring of course to quitting is the quite initially stage right after you have acknowledged the existing problem.
    I have programmed myself to be successful. I have reported yes to a new
    everyday living and I am not likely to are unsuccessful.

    Putting your complete heart and mind powering this decision will assist you by means of the hurdles.

    Ignore about how happy or fulfilled you felt when you smoked pot.

  41. dfg
    My developer is trying to persuade me to move
    to .net from PHP. I have always disliked the idea because
    of the expenses. But he’s tryiong none the less.
    I’ve been using WordPress on several websites for about a year and am worried about switching to another platform.
    I have heard good things about blogengine.net.
    Is there a way I can transfer all my wordpress posts into it?
    Any kind of help would be greatly appreciated!

  43. You can definitely see your enthusiasm within the article you
    write. The world hopes for even more passionate writers such
    as you who are not afraid to mention how they believe.
    All the time go after your heart.

  44. wonderful submit, very informative. I’m wondering why the
    other specialists of this sector do not notice this.
    You should continue your writing. I am sure, you have a great readers’ base
    already!

  45. May I just say what a relief to find somebody that genuinely knows what
    they’re talking about on the web. You certainly know how to bring an issue to light and make it
    important. A lot more people should look at this and understand this side of the story.

    I can’t believe you are not more popular since you certainly possess the gift.

  48. I just like the helpful information you provide in your
    articles. I’ll bookmark your weblog and take a look at once more here regularly.
    I am slightly sure I will be informed plenty of
    new stuff proper here! Good luck for the following!

  49. I am extremely inspired along with your writing talents as well as with the format to your
    blog. Is this a paid subject or did you customize it your self?

    Anyway stay up the nice high quality writing, it’s rare to
    peer a nice blog like this one today..

  50. Thank you a lot for sharing this with all folks you actually understand what you’re talking about!

    Bookmarked. Kindly additionally consult with my website =).
    We could have a hyperlink alternate arrangement between us

Leave a Reply

Discover more from Small Business Paths

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

Continue reading