Date post: | 17-Aug-2014 |
Category: |
Economy & Finance |
Upload: | the-motley-fool |
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7 Investment Tax Breaks You Need To Know
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
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
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
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
3. Retirement Account Fees
• If you are charged fees related to your retirement accounts, they might be tax deductible
Flickr/ 401(k) 2012
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
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
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 olderFlickr/ 401(k) 2012
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
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
bracketFlickr/ 401(k) 2012
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
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)
Take advantage of this little-known tax loophole