YEBies Presents: Weekly Tax Tips For The Win (WTTFTW) Week 3
Welcome to the third edition of the WTTFTW, where this week I want to focus these tips towards Investors. These tips are for those who are saving for retirement or those investing for the right now. Either way you are gonna need to know how to keep Uncle Sam from working you for your savings this year.
Tax Tip 1: Understand Your Capital Losses: The IRS allows individuals to use your capital losses to reduce your capital gains to 0. In cases where your Losses exceed you Gains, you are only limited to a $3,000 deduction on you tax return. However, the remaining losses can be carried forward into future years to offset gains. With the market collapsing in 2008 and slightly recovering in 2009, it is possible you are in a situation where you would be able to use last years capital losses to reduce 2009 gains. Remember that you can reduce the capital gains to 0, and take up to $3,000 in capital losses in this situation.
Tax Tip 2: Contribute to the IRA Traditional. IRA (not ROTH IRAs) contributions are available deductions to taxable income. For 2009, the maximum amount you can contribute to your IRA is $5,000, out of that $5,000, you can keep $3,500 on your 2009 tax return. The biggest benefit is you have until April 15th, 2010 to contribute to your IRA and still take a deduction for your 2009 tax return. That is a huge benefit for taxpayers with extra cash looking to reduce your 2009 taxable income, as well as, help you start saving towards retirement.
Tax Tip 3: Understanding Your Qualified Dividends. Qualified dividends are reported on line 1b of your 1099-Div, these dividends are subject to a lower tax rate of 15%. You can go here for a description on qualified dividends. This tip is to inform you that your qualified dividends from line 1b. are included in 1a. (Ordinary Dividends) on the form 1099-Div. So, in order to prevent double counting and overstating your income make sure your subtract 1b from 1a when entering ordinary dividends.
That's it for the Weekly Tax Tips, check back next week for some more crucial information and remember your W-2's and 1099's should arrive before January 31st. Again, if you have any questions/concerns, just leave a comment.
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