What are Loopholes?

What Are Loopholes?

The very phrase "tax loopholes" suggests that somebody is outsmarting the IRS. Not True! All so called "loopholes" are put there intentionally by lawmakers. Not only are they legal, they were put there by lawmakers for a purpose.

They just seem too good to be true, or something available only to the rich. Again, Not True! "Loopholes" can be utilized by anyone...whether it's a Backdoor Roth IRA or Net Unrealized Appreciation, or any of the other so called "loopholes."

Someone tells you they have real estate or precious metals in their IRA. A friend tells you that they withdrew their entire 401K at low long-term capital gains tax rates. You see an internet ad on how to access your IRA or 401(k) tax-free & penalty-free. You can use the money to fund your startup business.

Your neighbor says he made a "Backdoor" Roth IRA contribution even though you know your neighbor makes too much money to contribute to a Roth.

Ask the average two week tax school tax preparer, & the probable reaction is, No Way!

All of the preceding transactions have been done successfuly.

If you know anything about income taxes, these stories sound too good to be true. IRS regs certainly must prohibit these types of transactions & tax rates. Here's a list of links to more information about the most common so-called "Loopholes" available to individuals:

Net Unrealized Appreciation

Backdoor Roth IRA

What is a Tax Loophole

The only caveat is Buyer Beware! These transactions are not for the faint of heart. The fees charged by companies selling these plans can be substantial. Each has specific rules that must be met for the transaction to be acceptable by the IRS.

Mess up and it will cost you big time! To quote an article in one of the adjoining pages, "You better damn sure know the rules." Also be aware that all of these strategies are subject to legislative change at any time.

Contact Us if you wish to discuss the details of "Loopholes."

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