As always, please consult a tax professional for information specific to you. The below information is not intended to be tax advice.
Year-end generally is a time when investments are analyzed, and tax strategies are implemented to try and save a few bucks. Below are the bullet points you should be aware of. Full detail is provided in the link above from the IRS website.
- When a capital asset (example: a stock) is bought and then sold, a taxable event has occurred
- If the price you paid is less than the price you sold it for, you have a Gain
- If the price you paid is more than the price you sold it for, you have a Loss
- If the time between the purchase and sale is one year or less, you have a Short Term Event
- If the time between the purchase and the sale is greater than one year, you have a Long term Event
- Short term gains are taxed at ordinary income rates
- Long terms gains are taxed at capital gain rates
- You are able to NET gains against losses to reduce the amount taxable
- If your capital losses exceed your capital gains, the amount of the excess loss that you can claim to lower your income is the lesser of $3,000 ($1,500 if married filing separately) or your total net loss shown on line 21 of Form 1040
If you have any questions or would like to discuss a specific event, don't hesitate to contact us.
To your financial success,