Business Essentials, 12/e

Cashing Out from Tax Avoidance (Legally)

Personal expenditures always require cash outflows. Some also reduce your tax bill and save you some cash. Individual retirement accounts (IRAs) and some education savings accounts have this effect. (Before you commit any money to these instruments or activities, check with an expert on tax regulations. They change from time to time.)

The IRA Tax Break

With a traditional individual retirement account (IRA), you can make an annual tax-deductible savings deposit of up to $5,500, depending on your income level. IRAs are long-term investments, intended to provide income after age 59 1/2. For distant future savings, an IRA boasts immediate cash advantages over a typical savings account because it reduces your ...