With the end of the year approaching, I would like to review how you can make use of your stock portfolio to lower your tax bill. I will briefly discuss seven tax strategies that you can use to your advantage.
First, let’s go over some background information. Your short-term capital gains are taxed like ordinary income. This means you pay federal taxes at rates of up to 43.4 percent: the top income tax rate of 39.6 percent plus the 3.8 percent Affordable Care Act tax on investment income. You pay taxes on your long-term capital gains at rates of up to 23.8 percent (20 percent for capital gains plus 3.8 percent on investment income). And if you are in the 15 percent income tax bracket, then you pay zero taxes on long-term gains.
The goal of the strategies below is to avoid the 43.4 percent tax, and instead pay tax at the 23.8 percent or even the 0 percent rate when possible.
Please contact me if you would like to discuss any of the strategies above. I look forward to hearing from you.
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Spencer Accounting Group, LLC does not provide investment, tax, legal, or retirement advice or recommendations in these blogs. The information presented here is not specific to any individual's personal circumstances.
Keana Spencer is an Accountant, Entrepreneur, and Educator to her clients, with a strong passion. Keana has over 10 years of experience and through her practice, she is a source of knowledge and strategies to her clients.