Best tax breaks
These four strategies can save you some serious cash when Uncle Sam comes knocking.
Strategy: Open the Roth backdoor.
The full benefits of a Roth IRA, in which you make after-tax contributions but withdraw income tax-free at retirement, are normally limited to families that earn less than $166,000 a year ($105,000 for individuals). In 2010, though, Congress will open a backdoor. Anyone can convert a traditional IRA to a Roth and get shelter from the tax hikes that are probably coming in future years.
So if you pass the income limit, contribute the full $10,000 (for a couple under 50) to a nondeductible IRA this year - and convert it next year. At conversion, you'll have to pay ordinary income tax on any growth in the account. But you can average those payments over two years.
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Last updated April 17 2009: 8:38 AM ET