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Tax Loss Harvesting And Your Portfolio

As you get ready for St Patrick’s Day you might be looking at your tax liability and wondering how next year your tax situation could be better. Tax Loss Harvesting within your investments could be beneficial for you if you hold mutual funds of stocks outside of a retirement plan. Tax Loss Harvesting involves selling your losers before the end of a tax year and replacing them. That way, you can harvest, or realize the losses on your taxes for the year.

Many brokerages offer year end reports for those that want to harvest their losses for tax reporting . Some have even gone so far as to offer automatic tax loss harvesting, selling your losers for you. While others are advising that making adjustments for tax purposes could run counter to your overall objectives and should be avoided if it detracts from what you set out to do with your portfolio.

Tax Loss Harvesting

You can preserve the long term goals of your portfolio by selling a losing asset prior to the end of the year and then repurchasing the same asset 30 days later. The 30 days is required to avoid having a wash sale. Consider the cost you need to pay to sell and repurchase compared to the tax advantage you might have. There’s more benefit if you are in a higher tax bracket and you have ordinary income to off-set.

Take a look at TurboTax’s TaxCaster to estimate your taxes for the year.

 

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Author StevePosted on March 9, 2015September 13, 2016Categories Deductions, Tax Law, Tax Preparation, TurboTaxTags 401(k), Addison, AMC (TV channel), Arun Jaitley, Capital gains tax, Exchange-traded fund, High-yield debt, Individual Retirement Account, Mutual fund, Roth IRA, Tax exemption, Texas

Free Tax Tips: Saving For Retirement

If you are a new graduate, you should start saving now for retirement. Life never stops; one day you are celebrating a special achievement, and the next you are facing yet another life milestone. Congratulations on becoming a college graduate! Have you thought about retirement?

If you were to ask this question of many recent college grads, they would probably all look at you and roll their eyes. After all, retirement is many years away, right? If you are in your twenties, you still have about 38-42 years before you reach retirement age, but you should not forget about your financial future. After all, the earlier you start saving for retirement, the better.

English: This is a logo of the State Universit...
English: This is a logo of the State Universities Retirement System. (Photo credit: Wikipedia)

Reasons to start now: (free tax tips)

When I first graduated from college, I was extremely broke with student loans hanging over my head. When I was able to get that important first job, the last thing I wanted to think about was paying myself for retirement at age 65. However, you should get yourself into the mindset of saving anytime you have an income. Just get into the habit of putting aside a little bit of money for retirement. You will thank yourself later on in life and you’ll be working hard toward your own personal financial goals. It’s very simple; the more you save now, the more you’ll have to live on later. And if you start in your twenties, with compound interest, you’ll have way more money than if you wait to start saving in your thirties.

Free Tax tips-Saving Money:

You can decide to simply open a savings account locally or start up a 401(k) or an IRA. Start with what you understand, just as long as you are saving some money back. There are advantages and disadvantages to each, but remember,they are all ways of retirement savings.

Avoid Costly Mistakes:

There are no cut-and-dried answers to your personal financial questions. Make sure to do your research, and make a budget and keep it. Use your credit in a wise manner and build a better financial future for yourself. Use these free tax tips in order to make the most of your retirement savings now.

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Author StevePosted on August 19, 2014November 1, 2017Categories Tax PreparationTags 401(k), Compound interest, Finance, Individual Retirement Account, Internal Revenue Service, Motley Fool, retirement, Roth IRA, Social security, Tax incentive, Traditional IRA

How to Choose Your IRA CD Investment

Many IRA account holders who want to increase their retirement funds in a risk free way look into certificate of deposits. Certificate of deposits are one of the best investments for conservative investors. CDs are considered as money in the bank and there is no way that you will lose your investments as long as you wait for the maturity date. Most CDs are insured by FDIC and CDIC so no matter what happens to the financial institution, you can still get your money back. But despite the fact that CDs are safe, you must still be careful in choosing your CD investments. Here are some of the things that you need to consider in choosing your CDs.

The first thing that you need to consider in choosing your CDs is the rate. The IRA CD rates usually depend on the amount that you deposit and the maturity date. The bigger your deposit the higher your CD rate is. If you want to get the best IRA rates, you should consider investing in jumbo CDs. Jumbo CDs usually have the highest interest rates but you should also have to make a large deposit. Usually large companies invest in jumbo CD to make their funds grow without the risk of losing their money. Jumbo CDs usually require a $1 million deposit or more. However, some financial institutions require lower deposits.

Aside from IRA CD rates, you should also ay particular attention to the term of your CDs. Take note that once you have deposited your money, you have to wait for the term to expire before you cash out your funds. If you take out your funds before the term expires, you will be charged with hefty penalties and other fees that may apply. To avoid early withdrawals, it is important to tuck away enough money in the bank for emergency purposes.

Lastly, you should make sure that the financial institution where you plan to purchase your CDs is insured. Some financial institutions are not insured and even though they provide higher IRA CD rates, it is not worth the risk. The best IRA rates do not only offer high returns but are also safe.

Related articles
  • Fee Based Investing Versus Traditional Investing (2009taxes.org)
  • Tax Carnival Ecstasy – November 8, 2011 (2010tax.org)

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Author StevePosted on January 10, 2012June 28, 2014Categories tax forms, Tax Law, Tax Preparation, TurboTaxTags Business, Certificate of deposit, Compact Disc, Credit card, Federal Deposit Insurance Corporation, Individual Retirement Account, Invest, Investment, Money, Mutual fund, Roth IRA, TurboTax

Retirement Advice For Which Plan To Use

There are many ways to put back money for retirement and many ways to invest without a saving of money for retirement. Some of the plans that can be used for retirement include Individual Retirement Accounts and company retirement accounts. Discussed below are the advantages and disadvantages to holding an individual retirement account known as a Roth IRA.

A Roth IRA is a retirement account that allows for an individual within a certain income bracket to contribute a certain amount of money each year to a fund. The fund is not tax deferred meaning that the year the money is placed into the account it will be taxed as normal income. As stated above there are Roth income limits and contribution limits that regulate how much a holder can make in order to contribute and how much a person can contribute based upon their income.

For most people the income limits are not a problem depending on your filing status, but basically an individual can not make over $180,000 in one year in order to contribute to a Roth IRA. If you have in the past qualified for contributions and have placed your money into a Roth IRA but the next year you did not qualify for contributions then the money previously contributed will be safe and tax sheltered. One major difference in a Roth IRA in comparison to other retirement accounts is the fact that the money in the fund never has to be withdrawn.

If the owner of the account decides they do not need the money it can be passed to an heir, or if the holder decides to wait longer to withdrawal funds there is no specified age at which funds have to be withdrawn. All other retirement accounts state that by a specified age minimal funds have to be withdrawn or a penalty will be applied to the funds.

Related articles
  • Traditional IRA or A Roth IRA You Decide (2011tax.org)
  • The Benifits of a Roth IRA (2008taxes.org)

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Author StevePosted on May 1, 2011June 28, 2014Categories Retirement Savings, Tax Brain, tax credits, tax forms, Tax LawTags Funds, Individual Retirement Account, Money, Pension, retirement, Roth IRA, tax, Tax bracket4 Comments on Retirement Advice For Which Plan To Use

IRA: Traditional IRA and Roth IRA

When two things are present and you have to pick one, you should compare first the two before making a decision. Because that IRA has two forms which are the traditional IRA and the Roth IRA, it is then valuable to compare these two so that you can determine which of them is the best for you.

In order to distinguish one from the other, we will compare the Roth IRA and the traditional IRA with regards to their rules ad regulations.

Traditional IRA Rules and Roth IRA Rules

Of course, there are qualifications before an individual person can be eligible to set up an IRA account. And obviously, he or she must be an income earner. IRA is a retirement plan that is offered to benefit income earners. There is no point of opening an account in the IRA when you have nothing to deposit into it out of the income that you receive.

The traditional IRA has an age limit for eligibility. All individuals who are already 79 ½ years and beyond can no longer set up a traditional IRA account. The Roth IRA has no age limits.

Contribution Limits 2011

For both the traditional IRA and the Roth IRA, the contribution limits for 2011 are $5,000 and $6,000. The maximum amount of $5,000 is set for IRA contributors who are at the age of 49 and downwards. On the other hand, the $6,000 amount is the limit of contributors who are at the age of 50 and upwards.

Distribution Rules

The Roth IRA distribution rules are apart from the traditional IRA distribution rules. According to the Roth IRA rule, withdrawals of funds can be made by the contributor any moment of time but after the five-year taxable period has expired. The period begins during the year in which the first contribution is made.

Under the traditional IRA, withdrawals should be made when the contributor is 79 ½ years old. This is a compulsory withdrawal. But withdrawals can be made as an option of the contributor when he or she is 59 ½ years old and upwards until 79.

Related articles
  • Basics of a Roth IRA Account (2011taxes.org)
  • When can you Take Advantage of a Roth IRA Account Online? (2009tax.org)

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Author StevePosted on April 26, 2011June 28, 2014Categories tax forms, Tax Law, Tax Preparation, TurboTaxTags adjusted gross income, Individual Retirement Account, Pension, retirement, Roth IRA, tax, Traditional IRA, United States4 Comments on IRA: Traditional IRA and Roth IRA

SEP IRA: the Flexible Retirement Plan

Choosing a retirement plan for your company can get very confusing. There are a lot of plans available today, each with their own pros and cons. If you are running a small business with a small group of employees or currently self-employed, then you would want a retirement plan that is easy to setup and flexible with contributions and fees. If these are the qualities that you want from a retirement plan, then consider getting a SEP IRA. But what is a SEP IRA?

Employer-Employee Synergy

A SEP is a retirement plan setup by employers for easy distribution of contributions for the employees. In this plan, only employers can make contributions. Employees on the other hand, are the ones who will setup their individual IRA plans.

Contribution Flexibility

A highlight of the SEP plan is its flexibility when it comes to contributions. An employer can choose whether or not he or she wants to make a contribution the SEP plan. The amount of the contribution to be given is also up to the employer. This no pressure setup is very beneficial for employers on a strict budget or profits that are not so favorable. If the business is not doing very well at this point in time, then an employer can choose not to contribute or lessen the amount that he or she wants to contribute. This allows the funds to be channeled to areas in the business where it can improve profits in the future.

If the business is doing well, then the high contribution limits (25% of employee’s annual compensation or $49,000 whichever is less) allows the employer to make big contributions to the SEP plan, to the benefit of the employees involved.

If flexibility is what you are looking for in a retirement plan, then a SEP IRA is one plan that you should consider. It gives a lot of freedom for employer’s contribution without sacrificing the benefits of the employees.

Related articles
  • Does a SEP IRA Fit You? (2010taxes.org)
  • IRA funds and mutual fund companies (2008taxes.org)

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Author StevePosted on April 4, 2011June 28, 2014Categories Retirement Savings, tax credits, tax forms, Tax Law, Tax PreparationTags Business, Employment, Human Resources, Individual Retirement Account, Pension, retirement, Roth IRA, SEP-IRA, Small business, TurboTax4 Comments on SEP IRA: the Flexible Retirement Plan

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