Did you know that you can save money on your taxes by investing money for your retirement? It is true. There are two types of retirement investments that are designed to offer major tax benefits: a Traditional IRA and a Roth IRA. A Traditional IRA provides tax advantages in a couple of ways. First, your contributions may be tax deductible. And second, the earnings on your invested money are tax-deferred, so you only pay taxes when you make a withdrawal. A Roth IRA provides the opposite. Although not tax deductible, your contributions are made with after-tax dollars, so your earnings grow potentially tax-free. Distributions can be removed or withdrawn penalty free and tax-free as long as certain guidelines are followed. There are plenty of ways for citizens to lower their taxable income and potentially save thousands of dollars each year on their taxes. Investing for retirement in an IRA is only one of literally hundreds of methods a person could use to save money on their taxes or get a larger tax refunds. For some more tax tips that can help you start saving money, please see our Lewis Tax and Accounting Newsletter for Tax Season 2009. |