Tahoe-Truckee Market Beat: Tax deadline is fast approaching | SierraSun.com
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Tahoe-Truckee Market Beat: Tax deadline is fast approaching

Ken Roberts
Special to the Sun

Unless you’ve filed an extension, the deadline for filing taxes is rapidly approaching. Now might be a good time to review a few basic rules that apply to investment accounts.

One is your IRA contribution limit. For tax year 2014, the maximum contribution to all of your traditional and Roth IRAs cannot be over $5,500, unless you’re over age 50, then you’re allowed to contribute an additional $1,000 for a total of $6,500.

Contributions to a traditional IRA are deductible from your adjusted gross income while Roth contributions are made with after tax dollars.

You have until April 15, or the date you file your taxes, whichever is earlier, to make your IRA contribution for 2014.

The “Wash Sale” rule is an IRS regulation that says that you have to wait at least 31 days to repurchase a stock or fund that you have sold if you want to take a loss for tax purposes.

If you sold a stock or a fund in 2014 for a loss, you, your spouse, or a business that you own cannot buy, that same stock or a “substantially identical security” within 30 days or the loss will be disallowed.

Substantially identical security could mean a convertible preferred stock or using options contracts to maintain a position in the stock.

Long-term capital gains and qualified dividends are taxed at a lower rate than your income. People in the 10 percent and 15 percent tax brackets don’t have to pay any taxes on long-term gains or qualified dividends.

The tax rate on long-term gains and qualified dividends goes to 15 percent for people in the 25 percent to 35 percent tax brackets, and caps out at 20 percent for those in the highest income tax bracket, 39.6 percent.

Long-term gains are defined as investments held for more than one year. Short-term gains are investments held for less than a year; they are taxed at your marginal income tax rate.

For dividends to be considered “qualified dividends” by the IRS, they must meet some criteria. One is the holding period for the investment; it must be over 60 days.

So you if you buy a stock just before the ex-dividend date, then sell it in the short term, the dividend won’t qualify for the lower tax rate.

Good luck getting your taxes done, and if you have a complicated tax situation, you may want to consider getting professional tax advice.

Kenneth Roberts is a Truckee-based Registered Investment Advisor. Information is at his blog at http://www.sellacalloption.com or 775-657-8065. The mention of securities should not be considered an offer to sell or solicitation to buy investments mentioned. Consult your investment professional to understand the risks and/or how the purchase or sale of these investments may be implemented to meet your investment goals. Past performance is no guarantee of future results.


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