The U.S. government charges capital gains tax on most investment gains, but it gives you a handful of opportunities to limit or avoid taxes with tax-free and tax-advantaged accounts. Follow along to learn more about where you can restrict your fees and stretch your investment gains even further.
The IRS comes knocking whenever you make money. This is true even when you make money from your investments. You must pay capital gains tax when you sell your investments at a profit. That’s part of life. However, you can reduce what you owe. You just need to take certain steps to offset your gains. Here’s what you need to know about offsetting some of your capital gains taxes.
Once upon a time, I did my own taxes. I did not live happily ever after. In fact, after a while, things got fairly ugly. I spent a lot of time chasing down different forms and trying to make sure my increasingly complicated financial situation was properly represented on my tax return. In the end, I decided I’d be better off hiring a professional tax advisor to do the heavy lifting. Since then, I’ve saved countless hours of frustration, and my tax preparer has been worth every penny I pay him. However, not every tax broker is going to be the right fit for you. Think about it. When you have a problem with your car, you shop around for a mechanic. The same principle applies to your taxes. Shop around for a tax preparer that will get the job done — and get it done correctly.
Whenever you earn money, the government wants its cut. This is true whether you’ve made money by working for someone else, owning a business or investing. With investing, you can shield some of your earnings (at least for a time) by using a tax-advantaged retirement account like a 401(k) or a traditional IRA. If you have a Roth retirement account, you can completely avoid paying tax on your investment earnings. However, there are limits to how much you can contribute to these accounts, as well as restrictions on when you can access your money. In some cases, it makes sense also to have a taxable investment account. Once you sell assets in a taxable account, however, you need to be aware of the tax consequences.
Filing your federal income tax return can be a stressful and complicated task. Even if you hire a professional tax preparer, you still need to make sure you have all of your ducks in a row. So we’ve put together this handy guide to set you on the right path and to prevent you from running around like a chicken with its head cut off when April rolls around.
Who of us hasn’t dreamed of moving abroad at some point? For some, the lure of exotic beaches or cosmopolitan cities has proved too great, and we’ve found ourselves living abroad as a U.S. expat. Moving away from the United States can be an amazing experience. It may lead to a lower cost of living, new career opportunities and the chance to immerse yourself in a new culture. For retirees, it’s a decision that’s growing in popularity. But when you move abroad, you also run into a new host of challenges, including how to manage your investments. Read on to learn about the best ways for U.S. expats to invest while living abroad.
Working for yourself is the American dream, right? There’s no demanding supervisor hovering over you, you can set your own hours, and — if you choose to work from home — you never have to contend with a grueling commute or even putting your shoes on some days. However, despite the very American ideal of having the independence to be your own boss, there’s also the necessity of paying your dues to Uncle Sam. And for many people who decide to become self-employed, the issue of taxes can be a bit scary.
In 1969, it came to the attention of the federal government and the public that there were 155 tax return filers with incomes of $200,000 — equivalent to an annual income of more than $1.3 million in today’s dollars — who paid no federal income tax. While their $0 tax liability was legal within the tax code at the time — they were using federally allowed income deductions and tax breaks appropriately — the government was embarrassed and moved quickly to legislate a solution. From this the AMT, or Alternative Minimum Tax, was created, with the aim of making the tax system fairer.