another car for personal use,” says Eaton.
Reimbursed expenses for business use of your personal car typically are not considered taxable income. Similarly, other types of cash that flowed in during the year-gifts, for example-won’t be taxed. “Many people aren’t aware of nontaxable income,” says Stallworth. “You don’t owe income tax on child support, on life insurance proceeds or on money you inherit.” (Note that the individual laws vary from state to state. ) As it is, Uncle Sam ta
kes a large enough slice of the pie without you giving him an even bigger piece.
|TAX SAVINGS NOW OR LATER: Traditional vs. Roth IRAs|
|Maximum Annual Contribution||$2,000 per individual; $4,000 per couple||$2,000 per individual; $4,000 per couple (less contributions to traditional IRA)|
|Age Requirement||No contributions after age 70 1/2||Contributions after age 70 1/2 allowed|
|Income Requirements||None||Phased out for married couples with AGI over $150,000 and for singles with AGI over $95,000|
|Tax Stats||Tax deductible (unless you participate in a company retirement plan, which makes deductibility subject to income limitations).||Contributions are with after-tax dollars; no tax deductions, but withdrawals are tax-free.|
|Withdrawal Penalties||Penalty-free any time after age 59 1/2 but taxed as regular income; mandatory annual withdrawals begin after age
|Tax- and penalty-free any time after age 59 1/2 as long as IRA has been held for five years; no mandatory withdrawal age.|