Tax Tips for Investors

Seeing a good return on your investments is always a good thing. But it does bring with it some tax decisions that you must make in order to maximize the money you are able to keep for yourself. Here are several strategies that you can utilize to help:

  1. Contribute to a 529 College Fund. You may contribute up to $14,000 per year to each fund ($28,000 for married couples).  You retain full control of all investing decisions, including all contributions and withdrawals. The money is tax-free for the beneficiary and won’t affect your estate taxes.
  2. Donate Stocks or Bonds. It may be wise to consider donating any stocks or bonds that you’ve held at least a year that have appreciated. For example, if you donate a $10,000 stock that has doubled in value, you will save almost $6000 in taxes!
  3. User-Friendly Asset Allocation. By utilizing this tip, you can significantly lower your tax exposure. One example of this is tax-exempt municipal bonds, whose interest is free from taxation by the IRS. Depending on where you live, these savings may also apply to local and state taxes as well.
  4. Offset Capital Losses. If your capital losses for any given year exceed your capital gains, you may use up to $3000 of your excess loss to offset your income and reduce your taxes.

These are just a few of many smart ways to be efficient with your investments to reduce your tax burden. Contact your tax professional to discuss a plan for you and to identify further ways to accomplish your tax-savings goals.



About cozbycpa

Heather L. Cozby is a CPA on the South Shore and Cape Cod. The managing partner of Cozby & Company, LLC, Heather has the resources and experience necessary to provide quality professional services on a timely basis and at a reasonable cost. She specializes in tax planning & preparation; audit, review & compilation services; management advisory services; bookkeeping; and accounting. Her unique niche is in working with homeowners’ associations and condominium trusts, advising with rental real estate, and providing outsourced financial consulting for mid-sized companies. She is more entrepreneurial than most accountants, and offers the best of both worlds - providing the services of a larger firm while retaining the ability to connect with her clients on a personal level.
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