Interest earned from municipal bonds issued by state or local governments is generally exempt from federal income tax and sometimes state and local taxes.
1. Municipal bond interest:
Distributions from a Roth IRA are tax-free as long as certain conditions are met, such as holding the account for at least five years.
2. Roth IRA distributions:
If you sell your primary residence and meet certain requirements, you can exclude up to $250,000 of capital gains ($500,000 for married couples) from taxable income.
3. Capital gains from selling primary residence:
Rental real estate losses can be used to offset passive income, reducing or deferring taxes.
4. Rental real estate losses:
Contributions to an HSA are tax-deductible and withdrawals for qualified medical expenses are tax-free.
5. Contributions to a Health Savings Account (HSA):
If you sell an investment property and use the proceeds to buy another investment property through a 1031 exchange, you can defer paying taxes on the capital gains.
6. 1031 exchanges:
Royalties earned from leasing mineral rights, such as oil and gas, may be taxed at a lower rate than other types of income.
7. Royalties from mineral rights:
Income earned from certain types of trusts, such as a charitable remainder trust, may be exempt from income tax.
8. Income from certain types of trusts:
Qualified dividends received from certain types of investments, such as stocks, may be taxed at a lower rate than ordinary income.
9. Qualified dividend income:
Death benefits paid out from a life insurance policy are generally not taxable.
10. Income from a life insurance policy:
If you have a home-based business, you may be able to deduct certain expenses, such as a portion of your home's utilities, from your taxable income.
11. Income from a home-based business:
Income earned from certain types of crowdfunding, such as rewards-based crowdfunding, may be considered nontaxable gifts.