The new year is finally here, and now is the perfect time to start looking for ways to strengthen your investment portfolio and achieve more robust returns. But before you begin, it’s essential to know how taxes will impact these new investments by establishing an investment tax plan.
Investment Tax Advice to Help Protect Your Income
As an investor, it is essential to follow the right tax advice. This is because it governs how to grow your investment while ensuring taxes are paid. Here are vital tips to help any investor protect their income.
1. Utilize Tax-Efficient Accounts: One significant reason taxes disturb investment growth is because the tax rates are too high, leaving the investment with little or no profits. Hence, by utilizing tax-efficient accounts that best suit the investment, the tax rates will be favorable and support the growth of the investment.
2. Diversify Your Account Types: This method involves diversifying your portfolio into a different investment. This is effective because each investment will have independent tax treatments with rates that are more suitable and beneficial for your income.
3. Use Tax-Efficient Investments: Often, taxes disturb an investment’s income due to its investment type. That’s why it’s essential to look towards investing in tax-efficient investments like tax-managed funds, municipal bonds, treasury bonds, and exchange-traded funds. This will help you maximize your returns and save more money.
4. Matching Investments with the Correct Account Type: There are two tax account types: tax-deferred accounts and non-tax-deferred accounts. These account types are designed for diverse investments that are of unique qualities. These qualities allow the investor to enjoy specific tax benefits when the investment is matched with the correct account type.
5. Use Tax-Loss Harvesting: This strategy is used to offset tax liability when the loss incurred is higher than your gains.
Partner with Tobin & Collins for Tax-Efficient Investing Advice
Protecting your income from inadequate taxation is achievable with the correct tax investment strategies. Tobin and Collins can help you navigate and understand the U.S. tax code and how it impacts your investments. Our tax consultants are ready and able to assist you, so get in touch with us to get started today.