Tax deductions
An employee might elect to defer compensation until the following year. tax deductions Virginia-state-tax. An investor might arrange dividends and capital gains to avoid income for the year. There may be some tax issues to deal with, but in many cases this can be accomplished. An example: A 55-year-old business owner has a $600,000 IRA which was a rollover from a previous employer''s retirement plan. tax deductions Federal tax returns. He has adjusted his compensation and other income to total less than $100,000 for 1998. His converted IRA will be included as income at the rate of $150,000 for each of the next four years. He has arranged a line of credit to finance the payment of those taxes when due. tax deductions Turbo tax. In 15 years, at 9 % interest, the Roth will be about $2. 2 million. He can take distributions whenever he wants, or take none at all. All payments from the Roth will be income tax free. The original IRA would also have been worth $2. 2 million. However, all distributions would be taxable, and he would be required to take payments at age 70 1/2. This individual is assured of a comfortable and . tax-free. retirement. Even if a regular IRA is small, it will be much larger in the future.
Tax deductions
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