7 tax breaks for investors


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Seven little known tax breaks available to investors

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7 tax breaks for investors

  1. 1. 7 Investment Tax Breaks You Need To Know
  2. 2. 1. Investment Publications • Any of the following can be deducted on your tax return: – 1.) Investment-based newspapers like the Wall Street Journal or Investors Business Daily – 2.) Magazines related to investing or finance (Money, Kiplinger’s, etc.) – 3.) Online news services, like those offered by The Motley Fool
  3. 3. Tips to maximize your deductions • Always save your receipts to keep track of your qualified purchases • It may feel silly to ask for a receipt every time you buy a $1 newspaper or $3.99 magazine, but those little purchases could mean a pretty big deduction over the course of a year
  4. 4. 2. Safe Deposit Box Fees • If you keep any tangible investments in a safe deposit box, the costs can be deducted as an “investment expense” • Qualified items include – Stock certificates – Precious metals – Various investment paperwork
  5. 5. Tax tips…. • Just in case you get audited, it is a good idea to have pictures of your safe deposit box and its contents available to demonstrate its use for investment purposes
  6. 6. 3. Retirement Account Fees • If you are charged fees related to your retirement accounts, they might be tax deductible Flickr/ 401(k) 2012
  7. 7. Tax tips…. • Some people elect to have fees automatically debited from their account • Instead, pay your fees by check to ensure you can deduct them as an investment expense
  8. 8. 4. Hired Help • Any professional who helps you manage your investments is a potential deduction • You can deduct fees paid to – Accountants – Investment managers – Lawyers (when used for investment reasons) Andy Hill
  9. 9. 5. Traditional IRAs • Contributing to a traditional IRA is one of the biggest tax deductions you may be entitled to • Depending on your income, you can deduct up to $5,500 in contributions for 2014 – $6,500 if you’re age 50 or older Flickr/ 401(k) 2012
  10. 10. Tax tips…. • To check if you qualify, read over the IRA income limits here • The amount you can deduct depends on your income, marital status, and whether or not you can participate in a retirement plan at work • Bear in mind that you will have to pay taxes on the money when you eventually withdraw it • If you’d rather take the tax benefit when you retire, a Roth IRA might be better for you
  11. 11. 6. Long-Term Capital Gains • If you hold your winning investments for more than a year, the gains will be taxed at a substantially lower rate than ordinary income • Current long-term capital gains taxes are – 0% for the 10% and 15% tax brackets – 15% for the 25%, 28%, 33%, and 35% brackets – 20% for the 39.6% tax bracket Flickr/ 401(k) 2012
  12. 12. 7. Charitable Stock Donations • If you donate stock to a charitable organization, 100% of the market value of the stock may be written off • A good strategy for winning stocks Wikipedia/ Downingsf
  13. 13. Tax tips…. • If you donate a winning investment, you actually get a double tax benefit • Let’s say you paid $1,000 for a stock worth $2,000. • If you sold the shares and donated the cash, you would still be responsible for capital gains tax on the profits. • However, if you donate the shares, not only do you avoid the capital gains tax, but you get to deduct the full value of the shares ($2,000)
  14. 14. Take advantage of this little-known tax loophole