There are two things that are supposedly sure in life – death and taxes. Indeed, one cannot help but die in the end of one’s lifetime and as for taxes, unless you live in a tax free haven, you will be paying taxes on that hard earned income.

1. Deferring Taxes Is Possible
There are two things that are supposedly sure in life – death and taxes. Indeed, one
cannot help but die in the end of one’s lifetime and as for taxes, unless you live in a tax
free haven, you will be paying taxes on that hard earned income.
That being said there are certain things you can do to help alleviate this tax burden
somewhat. No you won’t be able to get out of paying taxes on your income but at the
very least you can defer having to pay the taxes right now.
Tax deferral is not a new thing. It simply means that instead of paying taxes on a certain
amount of your income in the current tax year you can hold off on doing that many years
down the line. This can help you big time if your income is at a high level such that you
are just over the next income tax bracket.
Perhaps the best instrument to defer income for tax purposes is to sign up and
contribute to a retirement plan. Such plans are usually tax deferred meaning your
contributions don’t get taxed until the day of maturity or when you start withdrawing
them.
A well-known plan is the one that is usually offered by employers – the 401(k) or 401(b).
This is a plan that employers have to help their employees save for their retirement. You
can contribute money from your gross income up to a certain amount and this is then
subtracted from your income before taxes are calculated.
The only time taxes will kick in is when you start withdrawing from your account starting
from when you reach 59 and ½ years of age. There’s also the traditional IRA or
Individual Retirement Plan. This is the same as a 401(k) and the income you put in
there is also tax deferred until you withdraw it later.