Tax implications liquidating mutual funds dating a french man tip

Posted by / 13-Aug-2017 00:35

Tax implications liquidating mutual funds

When it comes to paying capital gains taxes on inherited money, there’s not much you can do to minimize the tab.

That said, you could be strategic about when you sell, says Trish Evenstad, president of the Wisconsin Society for Enrolled Agents, part of the larger non-profit tax advocacy group, the National Association for Enrolled Agents.

While tax implications are an important component of long-term planning, Katz cautions investors never to let the tax tail wag the investment dog.

Weigh feisty bond alternatives If a fund makes sense within your portfolio, especially if you intend to buy and hold, the ex-dividend date should not weigh heavily on your investment decision.

Ordinary dividends and interest are taxed as ordinary income, the top rate for which now stands at 43.3 percent for those in the highest income-tax bracket (39.6 percent), who also owe the 3.8 percent Medicare surtax on net investment income.

Short-term capital gains from the sale of investments held for one year or less are also taxed at the higher ordinary income rate, while long-term capital gains on gains from the sale of shares held for one year or more are subject to the more favorable long-term capital gains rate.

Each mutual fund selects a specific so-called "record" date on which all current shareholders will be eligible for their annual distribution.For example, if you inherited 1,000 shares of a stock and the price has gone way up since you inherited it, selling all the shares will trigger a big tax bill in a single year.Spreading the sale over several years, however, would break up the amount you’d pay in taxes at once."If you're planning to buy the stock, buy the stock," Katz said."If you bought at 0, it falls to after the ex-dividend date and you eventually sell it for 0, what does it really matter?

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