TAX STRATEGOES
Tax Strategies: Basic Tips to Keep in Mind
The capital gains tax rate: How you can pay less: Capital gains tax rates are generally lower than other rates, but the tax hit can still be mitigated through strategic planning. An investor can offset capital gains with capital losses. For example, an investor with $10,000 in long-term gains and $5,000 in losses would be on the hook for just the $5,000 in net gains.
Time to assess your financial fitness: The Dow Jones industrial average is not the correct indicator of the performance of one’s own investment portfolio. The Dow only tracks 30 of the biggest U.S. companies. An investor should be paying attention to are market percentage changes, the savings rate, the tax rate, and the income replacement rate. —
3 tax deductions that could lead to an audit: If you are on extension and are going to file your tax return for last year, you need submit accurate data, especially when if you take a lot of deductions, to avoid a tax audit. You should pay particular attention to home-office or work-related deductions, as these usually cause an audit. Charitable contributions that are unusually big can also trigger a tax audit.
Watch out! Taxes don’t trump fundamentals: Investors should not make investing decisions based on tax considerations as the main goal. They may rather sell stocks and pay the dues than try to avoid the taxes, a move that could be more costly. In many ways, sound investing for growth is the key rather than merely looking to avoid taxes.
For more information or to schedule an appointment please contact
The Law Office of Robert Housman
310-276-3550
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