Key takeaways
- You pay taxes on investment profits when you sell an investment or receive an interest or dividend payment
- If you hold an investment for at least a year, you’ll pay taxes at a lower rate
- Accounts like a 401(k)s or an IRA can help reduce your investment taxes
Every April, Americans file their tax returns and settle their bill with the IRS. Taxes can have a significant impact on your investment portfolio and its performance. Understanding how the IRS taxes investments and how to limit those taxes is an integral part of any investing strategy.
Here’s what investors need to know to reduce their tax bill.
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