The taxable income tax rates for 2016 range from 10% to 39.6%. The IRS updates over 40 tax provisions for inflation to avoid what is called “bracket creep.” This is the concept of people being put into higher income tax brackets, rather than an increase in real income.
The IRS uses the Consumer Price Index (CPI) to calculate the past year’s inflation and adjusts components which ultimately impact: income thresholds, deduction amounts, and credit value.
In our current tax year of 2016, top marginal income tax rate of 39.6% will hit taxpayers with taxable income of $415,050 and higher for single filers and $466,950 and higher for married filers.
What if it were possible to stop the government from taking up to 39.6% of every dollar earned? I’m not talking about anything that is illegal, could eventually get you put in a cement cell wearing an orange jump suit like Mr. Madoff or even setting up a complex structure of offshore accounts in Switzerland or the Virgin Islands.
I am referring to using a self directed IRA (ROTH, SEP, SIMPLE), Individual 401(K), Health Savings Account (HAS), Educational Savings Account (ESA), or an Inherited IRA to take control of your investment options and create returns in a tax free/tax advantaged account. These accounts enable you as an investor to invest in private lending deals, real estate, private companies and more.
In short, you are allowed to invest in all vehicles that are not specifically considered “Prohibited IRA Investments” under IRC 408. Following is a list of what you cannot invest in with an IRA. Practically everything else is allowed, which makes for a wide range of investment opportunities.
- Collectibles such as artwork, coins, stamps, rugs, antiques, beverages and other personal property
- S-corp stock
- Gemstones and metals (except for certain U.S. coins and bullion which are allowed)
- Insurance contracts
In order to take advantage of these self-directed accounts, you will need to use a custodian. Here is a link to local custodian in the Philadelphia area: http://camaplan.com/
Many of our investors use self-directed accounts to invest in Legacy Capital private lending deals so their monthly investor payments are kept inside a tax advantaged account so they can stop partnering with the IRS.
Income Tax Brackets:
http://taxfoundation.org/article/2016-tax-brackets