Tax Tip: ‘Winning’ in the Stock Market Has Tax Consequences
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iStock/Thinkstock(NEW YORK) — Are you prepared to pay your capital gains?
Last year was a record-breaking one for U.S. stock markets. Investors, who cashed in on all the good times, will likely be paying taxes on those gains.
“The top tax rate on capital gains is 23 percent,” said Kevin McCormally of Kiplinger’s Personal Finance magazine.
There are, however, ways around paying the price.
Kathy Pickering, executive director of The Tax Institute at H&R Block, says if investors thought ahead they may have sold some of their losers before the year ended.
“If you had some gains and then you could also sell some stocks at a loss to offset that, that’s a great strategy,” she says.
Gift-wrapping gains may be a better bet, according Tom Wheelwright, founder of CPA firm ProVision.
“If you give stock, instead of having to pick up the gain and then get a deduction, you don’t have to pick up a gain, but get a deduction for the full value of the stock,” says Wheelwright. “So you’re not picking up gain and getting a deduction, so you get a double benefit.”
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