Taxes and Investment Gains Correlation

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Taxes play an important role in your investment strategy, regardless of your tax bracket. That’s why understanding how short and long-term term capital gains impact your investments over time can be critical. Below is a quick explanation on how that works.

Taxes and Investment Gains

Simply put, short-term gains are realized on investments held for under a year, while long-term capital gains are derived from investments held for more than one year. For example, if you purchase 100 shares of stock for $20 per share and sell them six months later for $25 per share, the $500 in profit is considered a short-term capital gain by the IRS and taxed at as ordinary income. Conversely, if you wait more than a year to sell the shares, they will be taxed at the long capital gains rate of 15% to 20%, depending on your tax bracket.

For investors in higher tax brackets, this rate can be substantially lower than the rate applicable to short-term gains.

Depending on your tax bracket, if you held the same shares for a year or more, you could end up making more money if the stock price continues to increase but still pay less at tax time. In addition, only your net investment income is taxable, meaning if you gain $500 from one investment but lose $500 on another in the same tax year, then your net gain is $0 and you are not required to pay any additional taxes.

This communication is designed to provide accurate and authoritative information on the subjects covered. It is not, however, intended to provide specific legal, tax, or other professional advice. For specific professional assistance, the services of an appropriate professional should be sought.

If you’d like to learn more about the relationship between investments and taxable gains in your portfolio, contact the UCC Financial Group at (801) 223-7502.

Securities and advisory services offered through Cetera Advisor Networks LLC, member FINRA/SIPC.
Cetera is under separate ownership from any other named entity.

Not NCUA/NCUSIF Insured – No Credit Union Guarantee – Not A Deposit – May Lose Value
Not Insured By Any Federal Government Agency.

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Helpful Tax Withholding Tips

Tax Witholding blog post

Tax Season: a phrase that usually comes with an instant headache and quick anxiety.  Even though taxes can be a complicated and often scary process, you can do more with your taxes than you think.

Benefits with collecting your tax refund on a monthly basis, rather than a yearly basis

So, are you employed?  If so, you probably filled out a W-4 form, which you fill out to show your employer how much to take out from your paycheck for federal taxes.  You may be withholding additional funds from your pay check, making April 15 an exciting time with a large tax return.  But every month, you are swamped with bills that have high interest rates, and that interest keeps building as time goes on.  If you could receive more money back on each paycheck, you could pay off those bills faster, you could cut your interest pay and save hundreds even thousands of dollars.  So instead of receiving a large sum once a year, adjust it so you receive it back on each pay check.

Fill out your W-4 form so your withholding corresponds to your tax liability, so you can take that money and invest it to something better.  Instead of “lending” the Government money, keep the extra cash and use it to pay off credit card debt, invest, or simply put it in a savings account.  Adjusting your withholding results in higher monthly income and allows you the flexibility you need on your finances.

Ways to spend your income tax refund

So, if you prefer your tax return once a year, how should you spend that extra cash?  Over 70 percent of Americans will get money back at the end of the tax year, with an average of $2,000*. Instead of trying your luck in Vegas, or buying a nonessential toy to put in your garage, consider these:

  • Invest!  Let your money do some work for you, and invest in something.  The stock market, for example, has a 12 percent interest rate, which can add up over time.
  • Pay for repairs on your home or car.
  • Make an extra home mortgage payment, which could save you money in interest down the road.
  • Place more into your retirement account.
  • Open a savings plan for a college education.

There are many beneficial ways to spend that extra cash.  Just remember, a tax refund is an interest-free loan to the government, and its simply money you’re missing out on every month.  Again, if you are receiving a large tax return each year, consider making some adjustments.  You may feel your tax return is a gift, but remember, each month your interest is building, and your losing a chance to pay that off every month.

For more help with your taxes, please click here for more information and guidance.  We have teamed up with TurboTax to make your life a little easier!

Sources
*http://balancepro.net/education/publications_taxes.html

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Turbo Tax Discount

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Feeling stressed about your taxes this year?  Don’t worry, Utah Community Credit Union has partnered with TurboTax to give members a discount on their tax return.  TurboTax is leading the nation in tax-preparation software.  This software makes it easy and inexpensive to assist you in your taxes.  Are you scared of math like most people?  Not to worry, TurboTax does all your math and calculations for you.  Give TurboTax your correct information, and they will give you a 100 percent accurate return on your taxes.  TurboTax guarantees all math calculations will be correct.

This year, TurboTax introduced mobile apps for iOS and Android platforms.  These apps enable members to work on their return from any device, tablet or computer.  TurboTax has introduced four apps that can be downloaded for free.  The Intuit app only costs to file your taxes.  The TaxCaster app can quickly estimate your tax refund.  The MyTaxRefund app tracts your efile status and knows when exactly when to expect your tax refund.  The final app ItsDeductible, can easily track your charitable donations all year.   So if you’re constantly on the go, the TurboTax apps are perfect for you!

If you are looking for the best deal, TurboTax has different packages to choose from:

AbsoluteZero: Are you a student, or a first time filer? This is the package for you.  It is free and easy to use.

Premier: Landlords, investors, and those who sold stocks, bonds, and ESPPs will be interested in the Premier package.  This package imports investment income, and costs $44.99 with UCCU.

Home & Business: This package is for self employed or small business owners.  If you are a freelancer, independent contractor, or have a home office tax deduction, the Home & Business package is perfect, and only costs $64.99 with UCCU.

So save up to $15 with your TurboTax federal products.  Utah Community Credit Union is here to help you save and assist in your tax return.  To learn how to save more, and make this hectic task a little easier, Click Here to start on your tax return today.

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TurboTax discount

Tax season is fast approaching, and sometimes it can seem difficult to know where to start. As tax codes are getting more and more complicated it can become confusing and overwhelming. That’s why at UCCU we encourage you to use online tax preparation services to get the biggest refund possible. Filing the correct tax information and getting it done quickly is now as easy as logging in to your computer with TurboTax.

 TurboTax helps you file your tax return electronically so you can receive the fastest tax refund possible. They will explain changes in your tax refund, and give you tips on how to earn the most money. TurboTax studies IRS and state tax laws so its software is always up-to-date, and you can be confident your taxes are done right. TurboTax is so confident that their system will work for you, they even a maximum refund guarantee,  they’ll double check your return for you and offer a 100% accurate guarantee

 UCCU, in partnership with TurboTax, is also offering our members a 10% discount on tax preparation services plus a chance to win in their 25K giveaway. We hope this great deal will help you navigate through this tax season so you can enjoy this time of year.

For more information, please visit your local branch or call 1-800-453-8188.

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