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Apr 1, 2021

We’re right in the heart of tax season and since it’s top of mind, let’s talk about some of the most common tax obligations you’ll have from investing.

There are many different ways that the IRS will take a cut of your income, but that doesn’t mean investing shouldn’t be a key piece of your planning. The key is knowing what might come with an added tax obligation and how you can take steps to minimize that.

First up are the ones most investors are aware of like dividends, capital gains, and interest. Nancy will explain each of these a bit further on the show and help you understand what considerations you should be making.

Then there are mutual funds. These often carry overlooked tax events because fund managers are buying and selling within the fund. When that happens, it triggers a tax event that gets passed along to the investor. The problem is you likely won’t see the rebalancing as it happens but be aware that it will probably show up at the end of the year.

This is why it’s important to consider tax-deferred vehicles like a 401K. These retirement accounts don’t cause yearly tax obligations so you only have to worry about it when you make withdrawals.

Keep in mind that the nuances of the tax codes will impact everyone differently so don’t take this episode as specific guidance. Seek the assistance of an advisor and a tax professional to help you make investment decisions that give you the best outcome. And remember that taxes aren’t aways a bad thing because it means you made money.

Check out the full episode or use the timestamps below to hear a specific segment.

0:48 – Tax season

2:49 – Dividends

5:13 – Interest

7:12 – Capital gains

10:45 – Ways to lower tax bill

12:14 – Don’t take tax minimization too far

12:54 – Taxes mean you made more money

14:04 – Charitable contributions


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