[Prescious92]

If you sell something and get a large amount of money , where would you put it so you don't get destroyed by paying tax on it. Some where you can use some of up also.

[JudyKayTee]

I don't know what you mean by paying tax on it. What have you sold?

Are you asking about hiding the money or simply investing it?

[Prescious92]

I don't know what you mean by paying tax on it. What have you sold?

Are you asking about hiding the money or simply investing it?

A piece of property. If I put it in to stocks or an IRA do I still have to pay tax on the money?

[Fr_Chuck]

You will have to pay the tax on the profit from the sale of the property.

There are no real tax defered investments where you can just have access to the money.

And the rules for 401K and IRA investments have rules

[ebaines]

Your objective should not be to pay no tax, but rather to have a good net return after taxes in an investment that is reasonably liquid. If your only issue is not paying taxes, then you should bury the money in a tin can in your back yard.

To give any real advice we would need more information from you to see how this lump sum fits in with your other savings and investments:

1. Do you have a time horizen for this investment? In other words, are you expecting to spend the principal on something else in the future, such as a down payment on a house? If so, how much, and when?
2. Do you already have other savings and/or investments - i.e. 401(k), IRA, other investments?
3. Do you have any debt? Credit cards, car loan, home equity loan, student loans, etc?
4. What is your tax bracket?
5, How old are you? Are you nearing retirement?

[ScottGem]

If you have a large sium of money from the sale of something AFTER taxes and you want to invest that money to produce a tax free return, then the answer is tax free municipal bonds.

But, as previous responses indicated, that may not be the best investment for you. The best investment depends on several factors like ebaines mentioned.

[morgaine300]

The tax isn't on what you got from the sale, it's only any gain you may have had. There are certain situations in which you wouldn't have to pay tax. For instance, if you sell a house, there's exemptions and rules about whether it's taxable. (Your typical sale where you buy another house won't be taxable.) If you perhaps have a situation like that, we'd have to know what it is. But it sounds like you just want to keep the money and not pay tax on any gains you had.

A tax-deferred or tax-free investment means not paying tax on CURRENT earnings of the investment, not on something completely irrelevant that came before it. If I stick money into a Roth IRA, I don't have to pay any tax on the earnings of whatever I have inside that Roth.

Now, a traditional IRA is deductible from income. So if you do that, yes, you can deduct that back off. But you're deducting it from just overall income, and not directly from something specific. But it would help reduce the effects of any gains you had. It's limited to $5000 per year or $6000 if over 50. But you get penalized if you take it out, except under certain circumstances (such as medical expenses). The idea is that it's for retirement. It sounds more like you just want to have your money.