[dropcap]T[/dropcap]he holidays are now a month behind us, which means it’s about time for another season: Tax Season. While you may not find it particularly festive, you can get through this season with a minimum of stress – if you’re organized. That means, among other things, you’ll need to gather the correct forms in one place. And right about now, you should be receiving many of the forms you’ll need – specifically, those tax forms related to your investments.
Whether you do your taxes yourself or use a tax professional, you’ll want to become familiar with these forms. Not only are they necessary for filing your taxes, but they can also tell you something about how you invest. To cite one example, if you’re seeing a lot of taxes related to short-term capital gains – which are taxed at your personal tax rate, rather than the more favorable long-term rate – you may be doing too much trading. You might want to consider moving toward a strategy in which you buy quality investments and hold them for the long term.
Here’s something else to look at: the taxes resulting from your traditional IRA and 401(k) withdrawals. Could you possibly withdraw less from these accounts so that your taxes will be lower? Once you’re 70½, you have to take at least a minimum amount, but other than that, you control the withdrawals – and you might benefit, taxwise, by taking out only what you truly need.
