As the end of the year approaches, smart taxpayers start thinking about ways to reduce their tax bill. One way is to take advantage of the many types of tax-free income that are available to investors. But how can you find those investments and make the most of them?
In the following video, Dan Caplinger, The Motley Fool's director of investment planning, answers that question by giving three easy ways that investors can take advantage of tax-law provisions to boost their tax-free income. He discusses municipal bonds, which are available both individually and in ETFs like the iShares National AMT-Free Muni ETF (NYSEMKT:MUB), the Pimco Intermediate Muni ETF (NYSEMKT:MUNI), and SPDR Nuveen Barclays Muni ETF (NYSEMKT:TFI).
Dan goes on to talk about two other opportunities. One involves taking advantage of the 0% tax on capital gains and dividend income for those in the 10% and 15% tax brackets. The other comes from using special retirement, education, and health-care accounts to get tax-free growth on your investments. By making the most of tax-free opportunities, you can reduce the amount you pay to the IRS next April.