I know that one of your biggest fears about investing is paying the correct taxes on all your different investments.
I get questions all the time, like: “Jim, what about taxes? I don’t want the IRS taking all my gains!”
I’m here to show you some very profitable tax tricks so you can legally dodge the taxman.
This is all completely legal, and I guarantee you won’t hear about any of these tax tricks from your accountant…
Capital gains tax can be a scary thought…
But it’s actually one of the easiest forms of taxes to sidestep (except for real estate taxes, of course).
The capital gains tax-rate varies from state-to-state and by how long you hold your investment.
Short-term gains (less than a year) are taxed with your income tax-bracket, while long-term gains (more than a year) are taxed anywhere from 15%-23%, with some states adding even more taxation on top of that.
If you’re lucky enough to live in one of the tax-haven states (Florida, Alaska, Tennessee, South Dakota, Texas, Wyoming and Washington), you’ll pay even less in taxes.
The major trick to sidestepping these taxes has everything to do with your timing—your timing when getting in the investment and your timing getting out.
You’ll see that these 4 tricks will help you dodge the tax man when he comes around to collect capital gains tax.
Trick #1
When possible, invest in exchange traded funds (ETFs). ETFs are made up of a basket of stocks that you can trade all at once.
The stocks within ETFs barely ever changed, as most ETFs aren’t actively managed, and they just follow a specific set of stocks.
That means that you’ll dodge certain portions of capital gains tax because the taxation only needs to be paid on the individual stocks.
Trick #2
Any charitable donations that you make can be given in the form of stocks. If your stocks have made profits, and you don’t want to pay taxes, gift the stocks and write of any taxations you incur as charity.
Trick #3
Gift stocks to family members. If you have a stock that has made a 20% gain, and you gift it to family members who belong to a lower tax bracket, their tax-bracket will be what is used for the capital gains tax and you could save yourself thousands of dollars.
Trick #4
Strategically plan your liquidation of certain investments to offset your capital gains tax.
If you’re taking a loss on an investment, and your gains have exceeded your losses for the year (which they probably will have), you can carry these losses over to the following year by keeping hold of your investment.
By legally making it look like you’ve lost more than you’ve gained, you’ll be able to knock $3,000 off your taxable income, which could possibly push you into a lower tax bracket.
The savviest investors use these tax tricks every year, but now you have them readily available at your fingertips so you can start dodging certain portions of capital gains taxes, and unlock that hidden capital that can be reinvest again year after year.
