Tax Information

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Is crypto subject to capital gains taxes?

The IRS currently considers cryptocurrencies “property” rather than currencies, which means they’re treated a lot like traditional investment (such as stocks). Selling at a profit triggers capital gains tax, while selling at a loss may allow you to take deductions.

What is taxable income?

Taxable income is income the IRS can tax you on. When we hear taxable income, we generally think of wages from a job or freelance work. Here are some additional income sources you can be taxed on: 

Interest income, whether from a savings account or bonds 
Dividend income 
Investment income, like short-term and long-term capital gains 
Rental income from a property you own 
Capital gains on the sale of a home (though there’s an exemption that applies first) 
Unemployment benefits 
Severance pay 
Lottery winnings and other prizes 
Gambling winnings 
Alimony for agreements entered before 2019
Jury duty costs 
Pension payments (though there are exceptions) 
Social Security benefits (there are exceptions for lower-income seniors) 
Traditional retirement plan withdrawals 
Settled debts where a portion of what you owe is forgiven (there are exceptions for bankruptcy filings)

What is tax-loss harvesting?

Tax-loss harvesting allows you to sell investments that are down, replace them with reasonably similar investments, and then offset realized investment gains with those losses. The end result is that less of your money goes to taxes and more may stay invested and working for you. 

If I qualify to contribute to both a Traditional IRA and a Roth IRA, are there tax implications I should consider?

Having a mix of both pretax and Roth contributions can help create additional flexibility in retirement to respond to a great unknown—future tax rates. For people who expect income in retirement to be as high or higher than their current level, others who expect their tax rate in retirement to be higher than today, or younger people who expect steady income growth over their careers, Roth IRA contributions may be the better choice. But if you believe that your tax rates will be lower in retirement than they are now, you may want to prioritize pretax vehicles like the Traditional IRA.

What are the tax implications for married couples filing taxes jointly?

Married couples can file taxes as married filing jointly. This can lead to tax savings for some taxpayers in the middle of the income spectrum.

What are the tax advantages of a Roth IRA?

Roth IRAs have some tax advantages. Since contributions are made after taxes, you can withdraw those contributions any time tax-free and penalty-free. Once you reach age 59½ and meet the 5-year requirement, you can also withdraw earnings tax-free and penalty-free.

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