Do You Apply Tax Strategies When Investing?

Do You Apply Tax Strategies When Investing?

Many of us are aware of the fact that the income received is taxable. This applies even to the income from the investment. When it comes to investment, all that we think of are the total earnings and the returns from such investment. Investors fail to read and realize the tax implications from such earnings. Many investors sacrifice half of their earnings/returns by paying the tax. Evading tax is illegal. Hence investors must look for investment strategies where they can enjoy both returns and tax advantages. There are ways to minimize your taxes on investment income. Let us analyze a few of them.

1) Look for the tax advantages: Not all the investment incomes are taxable. It is legal to avail the tax benefits or the advantages framed by the government. Do maximum research to benefit tax advantages and exemptions so that you get to enjoy all the benefits and privileges from the investment. For example, income by way of dividend is not taxable in the hands of the shareholder as the company pays such taxes. The tax rate also differs based on the term of investment holdings. Hence, an investor must look into overall tax aspects before investing in any investment.

2) Avoid short-term capital gains: When an investment is held for a period of less than a year, then such investments are called the short-term investments. The tax rate in case of short-term investments is high when compared to the long-term investments. When the stock prices are high and favorable for sale considering the market conditions, it is recommended that you do the backward calculation by analyzing the net income after tax and then proceed to execute the trade if still gain a decent amount after such analysis. Don’t decide in haste and execute a sale by considering only the price of the security. By extending your period of investment, you tend to save much tax.

3) Take advantage on the exemptions: While there are tax-free investment plans framed by the government from time to time, the government also offer tax exemptions to the investors upon fulfillment of conditions. Some assets carry a special rate of taxation. Investment in bonds allows you to claim a deduction from the total income. In a nutshell, think from a broad perspective and execute your transaction effectively.

Investors are eager to trade in the cryptocurrency market as they generate a phenomenal return. Investors seek the help of automated trading robot for trading in cryptocurrency. While trading bots help investors in earning an exorbitant return, it is the duty of the investor to study the tax implication from such income before executing the trade.