Follow ‘tax-smart’ investment moves - Ahwatukee Foothills News: Money

default avatar
Welcome to the site! Login or Signup below.
|
||
Logout|My Dashboard

Follow ‘tax-smart’ investment moves

Print
Font Size:
Default font size
Larger font size

Related Stories

Posted: Saturday, March 9, 2013 9:49 am

Now that tax season is here, and the debate over tax rates has been resolved (at least for now), you can focus on your tax return, which is due on April 15. As you work on your return, you may see some areas in which you’d like to make some changes for 2013 and beyond — and one of these areas may be your investments. Specifically, can you find ways to become a more “tax-smart” investor?

You may be able to benefit from taking the following steps:

• “Max out” on your IRA. Depending on your income level, you may be able to deduct some or all of your contributions to a traditional IRA. And your earnings can grow on a tax-deferred basis (Roth IRA contributions are not deductible, but your earnings and eventual distributions will be tax-free, provided you meet certain conditions). You can contribute to your IRA for 2012 right up until the tax-filing deadline on April 15. And for 2013, the annual IRA contribution limit has increased, from $5,000 to $5,500 (or $6,500, if you’re 50 or older).

• Boost your 401(k) contributions. You generally contribute pre-tax dollars to your 401(k), so the more you put in, the lower your taxable income (depending on your employer, you may even be able to make Roth contributions to your 401(k) plan). So, every time your salary goes up, you may want to consider increasing your 401(k) contributions. For 2013, you can put in up to $17,500 to your 401(k) or other employer-sponsored plan, such as a 457(b) or 403(b). If you’re 50 or older, you can add another $5,500 on top of the contribution limit.

• Consider tax-advantaged investments. If you can afford to put money away even after you’ve reached the limits on your IRA and your 401(k), you might want to consider other tax-advantaged investments. For example, you may be able to benefit from investing in municipal bonds, which provide interest payments that are free of federal taxes, and, in some cases, free of state and local taxes, too (some municipal bonds may be subject to the alternative minimum tax). Another investment possibility is a fixed annuity, which offers tax-deferred earnings growth. Your financial and tax advisors can help you determine which, if any, tax-favored investments may be suitable for your individual needs.

• Avoid frequent buying and selling. Many people constantly buy and sell investments, hoping to boost their returns. Such frequent trading is usually ineffective, however, and it can also be “taxing.” If you sell an investment that you’ve held for one year or less, you may have to pay the short-term capital gains rate, which is the same as your ordinary income tax rate. But when you sell an investment that you’ve held for more than one year, you’ll be assessed the more favorable long-term capital gains rate, which will be 15 percent or 20 percent, depending on your income level. So, as you can see, you have a real incentive to be a “buy-and-hold” investor.

Generally speaking, taxes, by themselves, shouldn’t drive your investment decisions. Instead, you should focus on an investment’s suitability for your risk tolerance and long-term goals. Work with your financial advisor and tax professional to see how you may be able to make progress toward your objectives and still keep control of your investment-related taxes.

• This article was written by Edward Jones for use by Ahwatukee Foothills Edward Jones Financial Advisor Kim DeVoss, CFP. Reach her at (480) 785-4751 or Kim.DeVoss@edwardjones.com.

More about

More about

More about

  • Discuss

Brexit Sends Tourists Flocking to London to ‘Buy, Buy, Buy’

By voting to leave the European Union, Britons have delivered a potential windfall to tourists eager to snatch up Burberry trenchcoats, Harrod…

Published: June 28, 2016 - 10:26 pm @ http://www.bloomberg.com/news/articles/2016-06-28/…

Dry Heat Check Podcast Ep. 1: Suns Draft, 80s Movies and More

It is the first ever edition of the Dry Heat Check with Jared Cohen and Greg Esposito or also known as the Devin Booker episode because Booker…

Published: June 28, 2016 - 9:55 pm @ http://www.sports360az.com/2016/06/dry-heat-check-…

Free A/C Into Saturday

September Breeze - Promising Holiday Outlook "There's no such thing as bad weather, just soft people" said Bill Bowerman. True, Bill wasn't ar…

Published: June 28, 2016 - 9:55 pm @ http://www.startribune.com/free-a-c-into-saturday-…

It's Not a Comeback, Lots of Updates, and a Hard Lesson Learned

What happens when The Beginning Farmer disappears for months on end? Well, actually lots things happen! Just recently I've been to Arizona to …

Published: June 28, 2016 - 9:07 pm @ http://thebeginningfarmer.blogspot.com/2016/06/tbf…

Two TV Reporters Charged With Child Abuse After 4-Month-Old Daughter Tests Positive for Cocaine in Tucson

Two Arizona television personalities face multiple charges after their baby became ill and eventually tested positive for cocaine, according t…

Published: June 28, 2016 - 8:57 pm @ http://ktla.com/2016/06/28/baby-of-arizona-tv-repo…

You can now major in ‘Moneyball’

First it was a strategy. Then a book. Then a movie. Now “Moneyball,” Michael Lewis’ tale of how the payroll-challenged Oakland A’s used data t…

Published: June 28, 2016 - 8:24 pm @ http://nypost.com/2016/06/28/you-can-now-major-in-…

Buddy Ryan has inspired two things: love and hate

Baseball Oh, Brother, What a Team The barnstorming Fredrickson boys were a baseball sensation of the 1920s Beating the Bushes Duke-bound Alask…

Published: June 28, 2016 - 7:54 pm @ http://www.si.com/vault/1994/07/11/131606/buddy-du…

Brush fire closes I-17 north of Phoenix, part of nearby town evacuated

PHOENIX — A brush fire forced the closure of Interstate 17 north of Phoenix and the evacuation of part of a small town on Tuesday, the Yavapai…

Published: June 28, 2016 - 7:36 pm @ http://ktar.com/story/1146757/brush-fire-closes-i-…

animago AWARD Extends Submission Deadline to July 19

MUNICH, GERMANY -- The submission deadline for this year’s animago Award has been extended. Creatives from all over the world now have until J…

Published: June 28, 2016 - 7:23 pm @ http://www.awn.com/news/animago-award-extends-subm…

Phoenix Suns accelerate rebuilding process with 2016 NBA Draft

PHOENIX - Marquese Chriss wanted to play in Phoenix but figured his chance had passed when the Suns used the No. 4 overall pick of the NBA dra…

Published: June 28, 2016 - 7:24 pm @ http://www.abc15.com/sports/sports-blogs-local/pho…

Facebook

ahwatukee.com on Facebook

Twitter

ahwatukee.com on Twitter

RSS

Subscribe to ahwatukee.com via RSS

RSS Feeds

Spacer4px

Most Popular

Online poll

Loading…