- ESOP Distribution: Rules, Taxes and Payout Options
An Employee Stock Ownership Plan (ESOP) provides employees with an ownership interest in their company, but accessing those funds follows strict distribution rules. These rules govern when payouts can begin, the form they take and how they are taxed. Understanding the timelines, options and tax implications helps you evaluate the value of an ESOP distribution… read more…
- ESPP Qualifying Disposition: Rules and Holding Requirements
An employee stock purchase plan (ESPP) qualifying disposition occurs when you meet certain IRS holding requirements before selling the stock you acquired through your company’s plan. Qualifying dispositions often get more favorable tax treatment than if you were to sell too soon, known as a disqualifying disposition. But the rules can be specific, and your… read more…
- How Is Rental Income Taxed When You Have a Mortgage?
Rental income is taxable, but having a mortgage on the property can lower what you owe. You must report all rental income, but you can deduct expenses like mortgage interest, property taxes, insurance, maintenance and depreciation. These deductions can reduce your taxable income from the rental. A financial advisor could help you track these deductions… read more…
- Does Rental Income Count as Earned Income?
If you earn money from renting out property, you’ll need to determine whether that income qualifies as “earned income” for tax purposes. This distinction matters; the IRS treats earned and unearned income differently. It’s a major factor when it comes to eligibility for certain tax credits, contributions to retirement accounts, and Social Security considerations. While… read more…
- Can You Buy into an ETF and Defer Taxes?
Exchange-traded funds (ETFs) can be tax-efficient investments, but they are not tax-free. You don’t owe taxes when you buy shares, but you may owe tax on dividends or capital gains if they occur. ETFs use a structure that helps reduce taxable events when compared with mutual funds, especially through the in-kind redemption process. However, taxes… read more…
- How to Avoid Taxes on CD Interest
Certificates of deposit (CDs) are a popular low-risk savings vehicle. But it’s important to consider that the interest they earn is fully taxable as ordinary income. Even if you don’t withdraw the interest until the CD matures, the IRS still expects you to report and pay taxes on it annually. While avoiding taxes altogether may… read more…
- Portfolio Interest Exemption: What Qualifies and Examples
The portfolio interest exemption is a part of U.S. tax law that lets foreign investors receive interest income from certain U.S. sources without paying withholding tax. This rule helps encourage international investment by lowering tax costs. To use the exemption, investors must meet specific requirements. A financial advisor can help you determine eligibility and gather… read more…
- Residual Value: Meaning, Examples, How to Calculate
Residual value is the estimated value of an asset at the end of its useful life. It’s used to figure out things like the value of a car at the end of a lease or how much equipment is worth after it’s been used. This value also helps with calculating depreciation for taxes. Because rules… read more…
- Section 1256 Contracts: What They Are and How to Report
Section 1256 contracts include certain regulated futures contracts, foreign currency contracts and non-equity options. These contracts receive a unique tax treatment under the IRS code and are subject to mark-to-market accounting, meaning that all open positions are treated as if they were sold at fair market value at the end of the tax year. This… read more…
- What Is SEC Rule 144A and How Does It Affect Investors?
Created by the U.S. Securities and Exchange Commission (SEC), Rule 144A allows qualified institutional buyers (QIBs) to trade restricted securities without a public offering. This rule improves liquidity and makes it easier for large investors to buy and sell private market securities. While mainly affecting institutions, it can also impact market conditions and investment opportunities… read more…
- The Augusta Rule: How to Rent Out Your Home for Tax-Free Income
The Augusta rule allows homeowners to rent out their primary residence for up to 14 days per year without paying federal taxes on the rental income. Originally created for Augusta, Georgia, residents during the Masters Tournament, this rule now benefits anyone using short-term rentals for extra income. However, it applies only to federal taxes—some states… read more…
- Transfer Pricing: What It Is and How It Affects Investors
Transfer pricing refers to the pricing of goods, services and intellectual property transferred between related entities within a multinational corporation. Companies use transfer pricing to allocate costs and revenues across different jurisdictions, which can impact taxable income and financial reporting. While the practice is legal, tax authorities scrutinize the details of how it is done… read more…
- How the Windfall Tax Affects Businesses and Industries
The windfall tax affects businesses and industries by targeting companies with unexpected or high profits. It can increase costs, change financial strategies, and impact decisions on growth or innovation. These changes can influence a company’s stock price and, in turn, individual investment portfolios. A financial advisor can help assess the potential impact on your portfolio… read more…
- Vanguard Evaluates Tax-Loss Harvesting Strategy to Offset Capital Gains: Is It Worth It?
Tax-loss harvesting can be valuable, potentially significantly so, to the right investor. This is the takeaway from a recent study released by Vanguard. The firm looked at the practice of tax-loss harvesting (TLH) to determine when this practice is most useful for an investor’s portfolio. Specifically, the authors analyzed how this can help maximize a portfolio’s… read more…
- What Is the Tax Loss Harvesting Limit?
Tax loss harvesting allows investors to offset capital gains by intentionally selling other investments at a loss, but there are limits to how much of these losses can be applied. The tax loss harvesting limit depends on whether the loss is used to offset capital gains or ordinary income. This strategy can be particularly useful… read more…
- Common Returns of Investing in a Hedge Fund
Hedge funds are popular with high-net worth individuals and institutional investors, in part, because of potential high returns and the expectation that their hedging strategies will constrain losses in a down market. However, in addition to widely varying returns, hedge funds come with special risks and complexities, including higher fees and less liquidity when compared… read more…
- How to Report Capital Gains on Your Tax Return With Schedule D
When you sell an asset for more than you paid for it, the profit you make is considered a capital gain and must be reported to the IRS. Understanding how to use Schedule D to report these gains will help you file your taxes accurately and avoid potential penalties. If you have questions about how… read more…
- Potential Tax Implications of Investing in a Startup
Investing in a startup can be an exciting opportunity, but it’s important to be aware of the potential tax implications. Understanding how different types of investments work and how funding rounds can affect your tax situation is an important part of the process. For example, initial investments might qualify for certain tax benefits, while subsequent… read more…
- How to Avoid Capital Gains Tax on Investment Property Sales
Selling an investment property can result in significant capital gains tax, but there are strategies to help mitigate this burden. Learning how to avoid capital gains tax on investment property sales requires an understanding of specific techniques, such as the 1031 exchange that allows you to defer taxes by reinvesting in a similar property. Additionally,… read more…
- How Tax-Efficient Is Your Mutual Fund?
Tax efficient mutual funds are designed to minimize the tax liabilities on your investment income, making them an attractive option for investors looking to optimize their after-tax gains. These funds use strategies such as low turnover rates and tax-loss harvesting to reduce taxable distributions. A financial advisor can also help you analyze the growth potential… read more…
- How Are Restricted Stock Units (RSUs) Taxed?
Restricted Stock Units (RSUs) are a common form of equity compensation, granting employees shares that vest over time. In the U.S., RSUs are taxed as ordinary income when they vest, based on their fair market value at that time. This triggers federal, state, and payroll taxes and any subsequent gains or losses are taxed as… read more…
- What Are Tax-Free Municipal Bonds and Should You Invest?
Tax-free municipal bonds are not just a source of investment but also a significant contributor to public projects such as roads, schools and hospitals. These debt instruments are issued by local or state governments, attracting investors for their provide tax-advantaged income. The interest earned from these bonds is typically exempt from federal taxes and, potentially,… read more…
- Pros and Cons of a 529 Rollover to a Roth IRA
A 529 Rollover to a Roth IRA is a financial strategy where an individual transfers funds from a 529 college savings plan, designed to pay for educational expenses, into a Roth IRA. This is a retirement savings account that offers tax-free growth and withdrawals. While it might be a good opportunity to transfer leftover 529… read more…
- What Are Investment Expenses and Which Are Tax Deductible?
Investment expenses include costs tied to managing or producing investment income, such as advisory fees, custodial fees and research subscriptions. But can you deduct investment-related expenses on your tax return? Under current tax law, most miscellaneous itemized deductions—including investment expenses—were suspended through 2025 by the Tax Cuts and Jobs Act. This means that, for now,… read more…
- Stock Buyback Clash: Biden’s Plan Faces Resistance From Critics and Investors
President Joe Biden has championed a substantial financial proposal in the latter half of his term: increasing taxes on businesses engaging in stock buybacks. This initiative aims to redirect corporate funds toward business expansion and job creation, instead of primarily… read more…