What accounts shelter income from taxation?

Answered on : 2024-01-23

Sources

Tax Shelter: Definition, Examples, and Legal Issues

investopedia.com

1

Legal Tax Shelters

money.usnews.com

2

What Are Tax-Sheltered Investments? Types, Risks & ...

annuity.org

3

view 7 more

To shelter income from taxation, individuals can utilize various legal strategies and accounts. Here are some common examples:

1. **Retirement Accounts**: Accounts such as traditional, SEP, and Roth IRAs, 401(k)s, 403(b)s, and 457 plans offer favorable tax treatment [2] [4].

2. **Charitable Contributions**: Deducting contributions made to eligible charities can reduce taxable income [2].

3. **Real Estate Investments**: Certain real estate activities or transactions may provide tax benefits [2].

4. **Business Deductions**: Business-related expenses and deductions can lower taxable income [2].

5. **Health Savings Account (HSA)**: Opening an HSA can provide tax advantages for medical expenses [2] [7].

6. **Tax-Sheltered Investments**: Assets structured to reduce income tax liabilities, such as annuities [3].

7. **Municipal Bonds**: Investing in municipal bonds can offer tax advantages [10].

It's crucial to note that tax shelters should always be legal and comply with tax laws [1] [8]. Consultation with a tax professional is advisable for personalized advice [1] [9].

Sources: Investopedia US News RetireGuide Tax Policy Center TurboTax SmartAsset Investopedia - Strategies

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