Believe
it
or
not,
there
are
ways
to
collect
tax-free
income
and
gains.
Here
are
some
of
the
best
opportunities
to
put
money
in
your
pocket
without
current
federal
income
tax
implications:
-
Roth
IRAs
offer
tax-free
income
accumulation
and
withdrawals. Unlike
withdrawals
from
traditional
IRAs,
qualified
Roth
IRA
withdrawals
are
free
from
federal
income
tax.
A
qualified
withdrawal
is
one
that’s
taken
after
you’ve
reached
age
59½
and
had
at
least
one
Roth
IRA
open
for
over
five
years,
or
you
are
disabled
or
deceased.
After
your
death,
your
heirs
can
take
federal-income-tax-free
qualified
Roth
IRA
withdrawals,
with
proper
planning.
-
A
large
amount
of
profit
from
a
home
sale
is
tax-free. In
one
of
the
best
tax-saving
deals,
an
unmarried
seller
of
a
principal
residence
can
exclude
(pay
no
federal
income
tax
on)
up
to
$250,000
of
gain,
and
a
married
joint-filing
couple
can
exclude
up
to
$500,000.
That
can
be
a
big
tax-saver,
but
you
generally
must
pass
certain
tests
to
qualify.
For
example,
you
must
have
owned
the
property
for
at
least
two
years
during
the
five-year
period
ending
on
the
sale
date.
And
you
must
have
used
the
property
as
a
principal
residence
for
at
least
two
years
during
the
same
five-year
period.
Note:
To
be
eligible
for
the
larger
$500,000
joint-filer
exclusion,
at
least
one
spouse
must
pass
the
ownership
test
and
both
spouses
must
pass
the
use
test.
-
People
with
incomes
below
a
certain
amount
can
collect
tax-free
capital
gains
and
dividends.
The
minimum
federal
income
tax
rate
on
long-term
capital
gains
and
qualified
dividends
is
0%.
Surprisingly,
you
can
have
a
pretty
decent
income
and
still
be
within
the
0%
bracket
for
long-term
gains
and
dividends —
based
on
your
taxable
income.
Single
taxpayers
can
have
up
to
$47,025
in
taxable
income
in
2024
and
be
in
the
0%
bracket.
For
married
couples
filing
jointly,
you
can
have
up
to
$94,050
in
taxable
income
in
2024.
-
Gifts
and
inheritances
receive
tax-free
treatment.
If
you
receive
a
gift
or
inheritance,
the
amount
generally
isn’t
taxable.
However,
if
you’re
given
or
inherit
property
that
later
produces
income
such
as
interest,
dividends,
or
rent,
the
income
is
taxable
to
you.
(There
also
may
be
tax
implications
for
an
individual
who
gives
a
gift.)
In
addition,
if
you
inherit
a
capital
gain
asset
like
stock
or
mutual
fund
shares
or
real
estate,
the
federal
income
tax
basis
of
the
asset
is
stepped
up
to
its
fair
market
value
as
of
the
date
of
your
benefactor’s
demise,
or
six
months
after
that
date
if
the
estate
executor
so
chooses.
So,
if
you
sell
the
inherited
asset,
you
won’t
owe
any
federal
capital
gains
tax
except
on
appreciation
that
occurs
after
the
applicable
date.
-
Some
small
business
stock
gains
are
tax-free. A
qualified
small
business
corporation
(QSBC)
is
a
special
category
of
corporation.
Its
stock
can
potentially
qualify
for
federal-income-tax-free
treatment
when
you
sell
for
a
gain
after
holding
it
for
over
five
years.
Ask
us
for
details.
-
You
can
pocket
tax-free
income
from
college
savings
accounts. Section
529
college
savings
plan
accounts
allow
earnings
to
accumulate
free
of
any
federal
income
tax.
And
when
the
account
beneficiary
(typically
your
child
or
grandchild)
reaches
college
age,
tax-free
withdrawals
can
be
taken
to
cover
higher
education
expenses.
Alternatively,
you
can
contribute
up
to
$2,000
annually
to
a
Coverdell
Education
Savings
Account
(CESA)
set
up
for
a
beneficiary
who
hasn’t
reached
age
18.
CESA
earnings
are
allowed
to
accumulate
free
from
federal
income
tax.
Then,
tax-free
withdrawals
can
be
taken
to
pay
for
the
beneficiary’s
college
tuition,
fees,
books,
supplies,
and
room
and
board.
The
catch:
Your
right
to
make
CESA
contributions
is
phased
out
between
modified
adjusted
gross
incomes
of
$95,000
and
$110,000,
or
between
$190,000
and
$220,000
if
you’re
a
married
joint
filer.
Advance
planning
may
lead
to
better
results
You
may
be
able
to
collect
federal-income-tax-free
income
and
gains
in
several
different
ways,
including
some
that
aren’t
explained
here.
For
example,
proceeds
from
a
life
insurance
policy
paid
to
you
because
of
an
insured
person’s
death
generally
aren’t
taxable.
So,
don’t
assume
you’ll
always
owe
taxes
on
income.
Also,
check
with
us
before
making
significant
transactions
because
advance
planning
could
result
in
tax-free
income
or
gains
that
would
otherwise
be
taxable.
©
2024