2011 Q2 | Income Tax Rates Hold Steady

2011 Q2 | Income Tax Rates Hold Steady

Tax legislation passed at the end of 2010—the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of2010—maintains the person in effect since 2003. In 2011 and 2012, those rates range from 10% to 35%. In 2012, we might see yet another debate on future tax rates. Capital gains and dividends The 2011 and 2012 tax rates ranging from 10% to 35% are on ordinary income: earnings, interest on savings accounts, pensions, and so on. For long-term capital gains and qualified dividend income (which includes most dividends received by investors), the top tax rate remains at 15% for this year and the next. Therefore, investors are likely to continue to seek dividend-paying stocks and all types of investments that may

2011 Q2 | Capital Gains, Not Ordinary Income

2011 Q2 | Capital Gains, Not Ordinary Income

Tax-exempt bonds that were purchased with a market discount before May 1, 1993, are not treated as market discount bonds. Any gain on the sale of such bonds is treated as capital gain. For example, suppose you bought tax-exempt bonds that were issued with a $10,000 par value. Before May 1, 1993, you paid $9,000 for those bonds. If you sell the bonds now for $9,500, you’ll have a $500 long-term capital gain. A similar example using tax-exempt bonds bought after April 30, 1993, would result in $500 of ordinary income taxed at higher rates.

2010 Q4 | Year-End Tax Planning for Investors

2010 Q4 | Year-End Tax Planning for Investors

For the past two years, investors have experienced extraordinarily tumultuous times. From late 2008 through early 2009, stock markets in the United States and around the world have fallen sharply. The S&P 500 Index, a leading benchmark for the U.S. stock market, lost about half of its value, for example. As the winter of 2009 came to a close, stocks rebounded. For the remainder of last year and into early 2010, stocks enjoyed one of the strongest recoveries since the 1930s. Investors who held on recouped some of their losses, and those who rimed the market successfully had sharp gains. During the second quarter of 10, however, stocks dived again. Debt woes in Europe and sluggish employment growth in the

2010 Q4 | Year-End Tax Planning for Mutual Funds

2010 Q4 | Year-End Tax Planning for Mutual Funds

If you invest in mutual funds, proceed cautiously at year-end. At this time of year, funds may distribute any net capital gains for 2010 to their shareholders. These distributions are taxable to investors (unless the fund is held in a tax-favored retirement account), and the share price typically drops to reflect the distribution. Example 1: Caitlin Carter invests $10,000 in Mutual Fund ABC in early December 2010. She acquires 500 shares at $20 apiece. One week later, ABC makes a $2-pershare capital gain distribution, and the share price drops to $18. Caitlin owes tax on a $1,000 capital gain distribution ($2 per share x 500 shares)-even though the distribution is essentially a return of her own money. Therefore, if you