The purpose of any investment is to make profits, and when investing in financial instruments gains be derived from interest, dividends, or the increase in the value of assets, the latter commonly known capital gains.
But it is not only important for profit but also keep them, and this is done by applying strategies permitted by law to pay less tax without falling into tax evasion. Among the strategies that can follow are the following
The capital gains tax on long-term investments are 15%. The Internal Revenue Service (IRS) recognized as long-term investments to those that have kept for a minimum period of one year.
While in the short-term investments as ordinary income taxes are paid. This may affect you if you are in a high income tax bracket.
Whether losses arising from your investments to short or long term can deduct up to $ 3,000 in losses. If your losses exceed $ 3,000, any excess amount may be reported in future statements.
If you have built up good gains already made during the year and have in your portfolio losses, consider going by getting rid of these positions before the end of the year, for losses, declare, and thus reduce the fiscal impact of your winnings.
Reinvested dividends increase your capital investments in a mutual fund and simultaneously reduce taxable profits. Suppose initially invest $ 5,000 in a fund in which you receive $ 1,000 in dividends, the same as they are reinvested in the fund. After a while you decide to sell your position in the fund by $ 8,000. Capital gains are calculated by subtracting the initial investment and dividend income received at the end. In this case
$ 8.000 – $ 5,000 – $ 1,000 = $ 2,000
The $ 2,000 capital gain is taxable. Unfortunately, some investors do not realize this and declare tax on the difference in income received at the end with the initial investment, which in our example would be $ 3,000.
For this reason it is therefore important to keep track of dividends that are reinvested.
Believe it or not, there are investments that are tax exempt, as in the case of municipal bonds are tax free both at the local, state, and federal. While Treasuries US are exempt from tax only at the local and state level.
If you add these investments to your portfolio you can get good tax advantages.
Expenses related to your investments can be deducted from taxes especially if you invest in small businesses or work on your own. For example, computer, travel, subscriptions, internet service, etc.
So not a bad idea to manage your investments under a legal structure, and not only for deductions you could take advantage but also as a way to protect your personal assets.
If you sold your house you must declare capital gains, and if there have been repairs or renovations with a shelf life of more than one year they must be included as part of the adjusted cost, equivalent to a reduction of profits capital, and therefore your taxes.
As part of the deductions, you must also include transactions costs such as fees paid to the broker. If tomastes borrow money to invest, the costs associated as interest paid should also be included to be deducted.
Investment not only care what you earn, but also conserved. Tax laws offer some advantages to investors, so you need to know and implement strategies that allow you to keep what you have earned.