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Join Ralph Estep, Jr., as he shares Tax Evasion Tips. Want to learn about 5 types of income the IRS doesn't tax? From gifts to inheritances, our latest episode delves into untaxed income sources and actionable steps to take advantage of them.
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Ralph:
What if I told you?
Ralph:
There are perfectly legal ways to earn income to the IRS doesn't tax.
Ralph:
Would you be interested in learning more?
Ralph:
Well, listen on to discover some of the surprising types of untaxed income and how you can take advantage of those.
Ralph:
That's what we'll be talking about on today's program, so you don't want to miss it.
Ralph:
Welcome to our tax evasion Saturday show.
Ralph:
I'm just kidding.
Ralph:
We're not talking about tax evasion folks but I'm so glad you chose to join us.
Ralph:
I just want to thank you for listening and supporting the program.
Ralph:
I'm coming to you as always from the Estep Farm at the Saggio Accounting studio today.
Ralph:
Let me put on my podcaster hat and put down those overalls and push that adding machine to the side.
Ralph:
And let's get into some financial wisdom from a Christian perspective.
Ralph:
Today, we're going to uncover some of the most common types of income.
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The IRS actually doesn't tax.
Ralph:
That's why I laughed a few minutes ago and I said, we're going to be doing our tax evasion Saturday.
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Now before you get too excited, I want to be clear the IRS taxes, most types of income.
Ralph:
As Romans chapter 13, seven says paid all what is owed to them?
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Taxes to whom taxes are owed.
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We have a responsibility to pay our fair share.
Ralph:
However, there are exceptions that can work to our advantage if used ethically.
Ralph:
And most importantly, legally.
Ralph:
Well, don't forget to subscribe to the show and join our email list.
Ralph:
You do that at askralphpodcast.com . So you don't miss tomorrow's show.
Ralph:
Our Sunday spiritual show will be called finding peace in God's plan.
Ralph:
So I hope you join me for that show tomorrow.
Ralph:
Well, let's start with today's relevant Bible verse.
Ralph:
A feast.
Ralph:
Is made for laughter and wine makes life Merry, but money is the answer for everything that comes from Ecclesiastes 10:19 this verse reminds us that while money is important.
Ralph:
It shouldn't be our sole focus in life.
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As followers of Christ, we can honor God through wise financial stewardship.
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While keeping our priorities straight.
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So let's get started first.
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Let's do a quick review of what counts as taxable income, according to the IRS.
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These are generalities folks, but the IRS considers the following to be taxable income.
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Wages salaries.
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Bonuses and tips.
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interest income from banks or investment accounts dividends from stock mutual funds.
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Capital gains from selling assets like stocks or property, or even your home.
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Income from self-employment or freelancing, you know, those side gigs.
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Prizes and awards, lottery and gambling winnings.
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All those things are considered taxable.
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From the IRS and those are things you better be reporting on your tax return.
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However, there are some notable exceptions to the list.
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So here are five.
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Common types of income, the IRS doesn't tax.
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The first one is gifts.
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Perhaps the most well-known untaxed income is gift money.
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As long as the gift giver, doesn't exceed the annual gift tax exclusion amount, which is currently around 16,000 for a married couple.
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The recipient doesn't have to pay taxes on that gift.
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Now, the other side of that, Is the giver.
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Doesn't get a tax benefit either.
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Gifts can be a great way to help with large expenses like a down payment on a house.
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Maybe college tuition or those medical bills.
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Just be sure proper gift tax forms are filed.
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If necessary, if that number is over that 16,000.
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So that's the first one gifts.
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The second one is inheritances.
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Inheritances are not considered taxable income for federal tax purposes.
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If you receive an inheritance from the estate of a deceased relative or friend, you typically don't have to pay income taxes on those assets.
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There are a few caveats here.
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Inherited IRAs or 401ks may have required minimum distributions that are taxable.
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Additionally, extremely large inheritances may incur estate taxes, But for most modest inheritances, there are no income taxes owed.
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So let's praise God for that act of grace.
Ralph:
Here's another one housing allowances for clergy.
Ralph:
Here's one specifically for my pastor friends, according to the IRS.
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Qualified ministers who receive a church, designated housing allowance can exclude that portion of their income from federal income taxes.
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Listen, folks, this can be a huge benefit, but be sure to follow the specific IRS rules.
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They have a whole publication about this.
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Another one we talked about, and this was on yesterday show and that's health savings account contributions.
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If you contribute pre-tax dollars to a qualified high deductible health plan.
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You can make tax deductible contributions to a health savings account up to certain limits each year.
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And those limits change each year.
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The great thing is the money grows tax free and can be withdrawn tax free.
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As long as it's used for qualified medical expenses.
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I personally use this strategy to help offset our high healthcare costs.
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Just be sure to spend the money on approved medical expenses and keep good records.
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Here's another thing is not taxable.
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And that's municipal bond interest.
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When you invest in certain government issued bonds like municipal bonds, you might hear them called munies.
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The interest earned is exempt from federal taxes and sometimes state taxes as well.
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You got to check with your tax advisor on those types of investments.
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These bonds are considered loans to state and local governments to fund public projects.
Ralph:
A lot of times they'll issue those for roadways or bridges.
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So here's a deal in exchange investors receive interest payments that avoid taxation, of course, as with any investment, there are risks involved.
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So do your due diligence.
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But municipal bonds can be a great tax-free addition to your income portfolio.
Ralph:
So now that we've uncovered five common types of untaxed income.
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Here's some actionable steps you can take to take advantage of these things.
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Number one.
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Look for gift giving opportunities.
Ralph:
Do you have a child getting married or buying their first home soon, Consider making a generous untaxed gift.
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Another thing you consider consult with estate planning, experts.
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This is something you should be doing.
Ralph:
Do you have any aging parents or relatives?
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You got to be proactive to understand any possible future inheritance and talk to those estate planning attorneys and see if there's ways that you can structure it.
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Here's one thing.
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I'll remind my clergy folks, clergy should review IRS housing allowance rules.
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If you're in the ministry, ensure you maximize this valuable tax benefit.
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Like I said, they've got a whole publication.
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Just for clergies.
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You want to make yourself aware of that.
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As we talked about little while, consider opening a health savings account.
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You can go back and listen to the show from yesterday, contribute pre-tax dollars and withdraw tax free for medical expenses.
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Another thing we talked about was explore municipal bond investments.
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Now I'm not an investment advisor, but there are a ton of people out there that can help you.
Ralph:
These can generate tax free interest income to supplement your portfolio.
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As I always say, be sure to consult qualified financial and tax advisors before making major financial decisions, but take hope knowing there are legal ways to keep more of your hard-earned income.
Ralph:
And not commit tax evasion and, land yourself in jail.
Ralph:
So before we wrap up on remind all of our listeners to visit our podcast page, do that at askralphpodcast.com . There you can leave a review, share your thoughts, or even send us a message with questions for future episodes while you're there, make sure you join our email list so we can send you our daily email with what's going on with the show.
Ralph:
You can also schedule a consultation.
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Me.
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If you've got some specific tax or financial accounting circumstances you want to discuss.
Ralph:
And here's my take for today.
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If, you know, someone who could benefit from knowing more about how to stay out of trouble with taxes and knowing about the things that aren't taxable, share the show with them and share our program with them in general.
Ralph:
Well, that was an insightful discussion.
Ralph:
Wasn't it?
Ralph:
So let's do a bit of a recap while most income is taxable.
Ralph:
I hate to tell you that, but it's the truth.
Ralph:
There are some exceptions that allow you to keep more of your hard earned money.
Ralph:
And those included, like we talked about gifts, inheritances.
Ralph:
Clergy housing allowance, HSA contributions, and municipal bond interest.
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But you've got to take the time to explore.
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If any of these untaxed income strategies could benefit you.
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Most importantly though, remember this.
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Proverbs chapter three, verse nine says Honor the Lord with your wealth and with the first fruits of all your produce.
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As followers of Christ, we are called to generously steward.
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All that he has given us for his glory.
Ralph:
So stay, financially savvy out there, and God bless you.
Ralph:
Join me next time as we continue to master our finances from a Christian perspective, God bless you today.
