Investing for the First Time?

Investing is something that every taxpayer should do. If you’re just now getting started with investing, it is an exciting and beneficial journey. However, it can also be tricky, especially when it comes to taxes, so it’s a good idea to have an accountant and/or investment adviser to help you through the process.   

In the meantime, though, here’s some solid advice to keep in mind.

Keep Detailed Records

First things first, you’ll want to keep detailed records of every transaction related to your investing.

Keep track of what you’ve bought, when, how many shares, the cost basis, commission, and anything else. You’ll need a lot of this information when it comes tax time.

Plus, having good records can also help you to ensure you’re making smart investments by keeping track of your gains and losses. It’s good for staying organized too.

Understand the Different Types of Gains

Something else to understand is that there are two types of gains in terms of taxation. There are short term capital gains and long term capital gains.

Basically, when you sell a gain after having it for less than a year, you pay the short term capital gains tax rate. You pay the long-term rate if you’ve held the gain for over a year.

The short term capital gains rate is based on your income and the tax bracket you fall into. The long term capital gains rate, on the other hand, is lower than ordinary income rates and is not tied to your income bracket.

Thus, holding onto your investments can often be beneficial in terms of taxation.

Don’t Forget to Pay Your Net Investment Income Tax

One final thing to know is that there’s a net investment income tax you may have to pay. This tax applies to single or head of household individuals who make over $200,000 or married filing jointly couples making over$250,000. If you are required to pay it, make sure that you do in order to avoid penalties.

These are just some basic tips that can prove helpful. For even more help and advice, however, be sure to turn to a professional.