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How Smart Investors Limit Their Tax Obligation

When you invest money wisely you are likely to create capital gains and income. Capital gains and income will increase your tax liability, but there are things you can do to limit the amount of taxes you pay.

First → Be aware of the amount of capital gains you’ve realized.

Second → Be aware of any capital loss you have incurred.

Third → Monitor your interest or dividend income.

It’s important to note that gains are realized once assets are actually sold for a profit and not before. And remember that losses can be carried over from one year to the next depending on the amount of losses you have. Make sure whoever takes care of your money is aware of any capital losses carried over from a previous tax year and any gains or losses you might have for the current taxable year.

As for income, whether it is interest income or dividend income, it is taxable in the year it is paid.

Timing is critical

Managing gains, losses and income will help you lower your tax bill, but timing is important. Gains or losses must be realized in the current taxable year. While some things can be left until April 15th, the taking of gains or losses must be done in the tax year for which you are filing.

At B&C Financial we review all our taxable accounts at the end of each year to take gains or losses, whichever is appropriate for the client. We ask our clients if they have carried losses over from the previous tax year or if there is any other event that may affect their tax situation. Maintain a dialogue with your investment manager and your tax advisor, and tax time will run much smoother. As with any relationship, the better the communication, the better the outcome tends to be.

Please let us know how B&C Financial can help you with your investment needs. To request an appointment, you may call 904-273-9850 or complete the form below.

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