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Alternative Mininmum Tax Calculator: Pay Taxes Online
Alternative Mininmum Tax Calculator: Pay Taxes Online: Pay Taxes Online IRS site OLT Turbo Tax Quickbooks Tax cut Tax Act
Wednesday, October 19, 2011
Tax Tips For The Individual Investor
Tax Tips For The Individual Investor
Tax-Deferred Programs Are Like Free Money
Every time you trade a stock, you are vulnerable to capital gains tax. Making your purchases through a tax-deferred account can save you a pile of money. Tax-deferred accounts come in many shapes and sizes. The most well known are individual retirement account (IRA) and simplified employment pension (SEP) plans. The basic idea is that you are not taxed on the funds until you withdraw, at which point you are taxed at the rate of your income tax bracket. Waiting to cash in until after you retire will save you even more because your income will likely be lower when you are no longer working and earning a steady income.
Also, while the benefits of tax-deferred accounts are substantial on their own, they provide an additional benefit of flexibility, as investors need not be concerned with the usual tax implications when making trade decisions. Provided you keep your funds inside the tax-deferred account, you have the freedom to close out of positions early if they have experienced strong price appreciation, without regard to the higher tax rate applied to short-term capital gains.
Read more: http://www.investopedia.com/articles/01/112801.asp#ixzz1bIdPOkcb
Read more: http://www.investopedia.com/articles/basics/08/advice-portfolio-management-administration.asp#ixzz1bIbeo4tu
Tax-Deferred Programs Are Like Free Money
Every time you trade a stock, you are vulnerable to capital gains tax. Making your purchases through a tax-deferred account can save you a pile of money. Tax-deferred accounts come in many shapes and sizes. The most well known are individual retirement account (IRA) and simplified employment pension (SEP) plans. The basic idea is that you are not taxed on the funds until you withdraw, at which point you are taxed at the rate of your income tax bracket. Waiting to cash in until after you retire will save you even more because your income will likely be lower when you are no longer working and earning a steady income.
Also, while the benefits of tax-deferred accounts are substantial on their own, they provide an additional benefit of flexibility, as investors need not be concerned with the usual tax implications when making trade decisions. Provided you keep your funds inside the tax-deferred account, you have the freedom to close out of positions early if they have experienced strong price appreciation, without regard to the higher tax rate applied to short-term capital gains.
Read more: http://www.investopedia.com/articles/01/112801.asp#ixzz1bIdPOkcb
Read more: http://www.investopedia.com/articles/basics/08/advice-portfolio-management-administration.asp#ixzz1bIbeo4tu
What You Get When You Pay For Investment Services
Administration
Of the three components, administration is the one that you will be least able to do on your own. Any registered broker/dealer has access to many equity, fixed-income and commodities markets through which they can buy and sell. For a host of reasons, you are not able to go directly to these markets yourself. As such, this is a subcomponent that you will have to outsource and pay for in the form of some fee or commission. Fortunately, with online discount brokerages, the costs associated with trading are minimal. In addition, these costs cover trade settlement, confirmations, and other client statements, all of which are in compliance with mandated regulations. There are some other administrative services, however, that are not automatically supplied by your brokerage firm.
While year-end reporting for tax purposes is required, not all brokerage firms track cost basis for you. This is something you can do yourself with a spreadsheet or even a notepad, but depending on the number of holdings you have it can be a time-intensive. In choosing a brokerage firm, try to find one that keeps accurate track of your cost basis. It will save you time when you prepare your tax returns each year. (For more insight, read How do I figure out my cost basis on a stock investment?)
Another important administration function you can handle yourself is performance reporting. Truly accurate reporting, however, will be almost impossible without some fairly sophisticated software that keeps track of all cash flows and is able to calculate time-weighted total rate of return. If your brokerage firm can do this for you at no additional charge, you are receiving a material increase in value.
Read more: http://www.investopedia.com/articles/basics/08/advice-portfolio-management-administration.asp#ixzz1bIbXwVXq
Of the three components, administration is the one that you will be least able to do on your own. Any registered broker/dealer has access to many equity, fixed-income and commodities markets through which they can buy and sell. For a host of reasons, you are not able to go directly to these markets yourself. As such, this is a subcomponent that you will have to outsource and pay for in the form of some fee or commission. Fortunately, with online discount brokerages, the costs associated with trading are minimal. In addition, these costs cover trade settlement, confirmations, and other client statements, all of which are in compliance with mandated regulations. There are some other administrative services, however, that are not automatically supplied by your brokerage firm.
While year-end reporting for tax purposes is required, not all brokerage firms track cost basis for you. This is something you can do yourself with a spreadsheet or even a notepad, but depending on the number of holdings you have it can be a time-intensive. In choosing a brokerage firm, try to find one that keeps accurate track of your cost basis. It will save you time when you prepare your tax returns each year. (For more insight, read How do I figure out my cost basis on a stock investment?)
Another important administration function you can handle yourself is performance reporting. Truly accurate reporting, however, will be almost impossible without some fairly sophisticated software that keeps track of all cash flows and is able to calculate time-weighted total rate of return. If your brokerage firm can do this for you at no additional charge, you are receiving a material increase in value.
Read more: http://www.investopedia.com/articles/basics/08/advice-portfolio-management-administration.asp#ixzz1bIbXwVXq
Tax-Loss Harvesting: Reduce Investment Losses
What Is Tax-Loss Harvesting?
Imagine that on the first day of any given year, you invest $100,000 in the U.S. stock market via an exchange-traded fund (ETF), like S&P depositary receipts (SPDR). Let's assume this ETF trades off by 10%, falling to a market value of $90,000. Rather than feeling sorry for yourself, you can sell the ETF and reinvest the $90,000 back into the stock market.
Although you are keeping your market exposure constant, for IRS tax purposes, you just realized a loss of $10,000. You can use this loss to offset taxable income - leading to incremental tax savings or a bigger refund. Since you kept your market exposure constant, there really hasn't been a change in your investment cash flow, just a potential cash benefit on the tax return. (Read more about SPDRs in What is a spider and why should I buy one?)
Now let's say that the market reverses course and heads north, surpassing your initial investment of $100,000 and closing out the year at $108,000, yielding the average 10% pretax return when adding a typical 2% dividend yield. For ease of calculation, let us assume that your marginal tax rate is 50%. Had you done nothing except buy-and-hold in the aforementioned scenario, you would have an after-tax return of 9%, represented by an 8% unrealized investment gain plus a 1% dividend gain (2% dividend less 1% paid in tax to the government due to a 50% marginal tax rate).
Read more: http://www.investopedia.com/articles/taxes/08/tax-loss-harvesting.asp#ixzz1bIb8NwRh
Imagine that on the first day of any given year, you invest $100,000 in the U.S. stock market via an exchange-traded fund (ETF), like S&P depositary receipts (SPDR). Let's assume this ETF trades off by 10%, falling to a market value of $90,000. Rather than feeling sorry for yourself, you can sell the ETF and reinvest the $90,000 back into the stock market.
Although you are keeping your market exposure constant, for IRS tax purposes, you just realized a loss of $10,000. You can use this loss to offset taxable income - leading to incremental tax savings or a bigger refund. Since you kept your market exposure constant, there really hasn't been a change in your investment cash flow, just a potential cash benefit on the tax return. (Read more about SPDRs in What is a spider and why should I buy one?)
Now let's say that the market reverses course and heads north, surpassing your initial investment of $100,000 and closing out the year at $108,000, yielding the average 10% pretax return when adding a typical 2% dividend yield. For ease of calculation, let us assume that your marginal tax rate is 50%. Had you done nothing except buy-and-hold in the aforementioned scenario, you would have an after-tax return of 9%, represented by an 8% unrealized investment gain plus a 1% dividend gain (2% dividend less 1% paid in tax to the government due to a 50% marginal tax rate).
Read more: http://www.investopedia.com/articles/taxes/08/tax-loss-harvesting.asp#ixzz1bIb8NwRh
Using Tax Lots: A Way To Minimize Taxes Read more:
Using Tax Lots to Your Advantage
Your choice of cost basis method can have a significant effect on the computation of capital gains and losses when you sell shares. For mutual fund shares, there are three common ways to identify the cost basis of the shares that you are selling: FIFO (first-in, first-out), average-cost method and specific-share method. For stocks, you could use FIFO, LIFO (last-in, first out) or specific shares. (For background reading on FIFO and LIFO, see Inventory Valuation For Investors.)
Read more: http://www.investopedia.com/articles/05/taxlots.asp#ixzz1bI6f3Ifq
http://www.investopedia.com/articles/05/taxlots.asp#ixzz1bI6Vg2kY
Your choice of cost basis method can have a significant effect on the computation of capital gains and losses when you sell shares. For mutual fund shares, there are three common ways to identify the cost basis of the shares that you are selling: FIFO (first-in, first-out), average-cost method and specific-share method. For stocks, you could use FIFO, LIFO (last-in, first out) or specific shares. (For background reading on FIFO and LIFO, see Inventory Valuation For Investors.)
Read more: http://www.investopedia.com/articles/05/taxlots.asp#ixzz1bI6f3Ifq
http://www.investopedia.com/articles/05/taxlots.asp#ixzz1bI6Vg2kY
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