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Don’t Pay Someone Else’s Taxes!

Capital gains are a good thing – we invest to earn a return. Capital gains distributions from mutual funds and exchange traded funds, though, create a potential tax liability for any investor receiving them. That’s something that investors may be able to plan around. Although funds trade throughout the year, most tend to distribute capital gains at the end of year in December. That means that an investor that buys shares of a fund at the end of the year may pay taxes for trades that took place in January. That investor would essentially be paying someone else’s taxes!

As the end of the year approaches, investors should consult with their wealth managers to help manage this issue. Many fund companies will publish their expected distributions. Investors would be wise to research any expected distributions for funds they intend to buy and avoid buying into a fund that could have a large, taxable distribution at year end until after that distribution has been paid. That does not mean that investors need to hold cash for a month or longer to avoid paying taxes on these distributions. They can find an alternate fund in the same asset class to use as an alternative.

Investors would be wise to avoid buying into a fund that is about to make a large taxable distribution. By buying an alternate fund with a similar investment policy, they can keep their assets invested without sharing the tax burden of another investor’s capital gains.

 

Important Disclosure Information

Please remember that different types of investments involve varying degrees of risk, including the loss of money invested. Past performance may not be indicative of future results. Therefore, it should not be assumed that future performance of any specific investment or investment strategy, including the investments or investment strategies recommended or undertaken by RegentAtlantic Capital, LLC (“RegentAtlantic”) will be profitable. Please remember to contact RegentAtlantic if there are any changes in your personal or financial situation or investment objectives for the purpose of reviewing our previous recommendations and services, or if you wish to impose, add, or modify any reasonable restrictions to our investment management services. A copy of our current written disclosure statement discussing our advisory services and fees is available for your review upon request. This article is not a substitute for personalized advice from RegentAtlantic. This information is current only as of the date on which it was sent. The statements and opinions expressed are, however, subject to change without notice based on market and other conditions and may differ from opinions expressed in other businesses and activities of RegentAtlantic. Descriptions of RegentAtlantic’s process and strategies are based on general practice and we may make exceptions in specific cases.

Important disclosure information

Please remember that different types of investments involve varying degrees of risk, including the loss of money invested. Past performance may not be indicative of future results. Therefore, it should not be assumed that future performance of any specific investment or investment strategy, including the investments or investment strategies recommended or undertaken by RegentAtlantic Capital, LLC (“RegentAtlantic”) will be profitable.

Please remember to contact RegentAtlantic if there are any changes in your personal or financial situation or investment objectives for the purpose of reviewing our previous recommendations and services, or if you wish to impose, add, or modify any reasonable restrictions to our investment management services. A copy of our current written disclosure statement discussing our advisory services and fees is available for your review upon request.

This article is not a substitute for personalized advice from RegentAtlantic. This article is current only as of the date on which it was sent. The statements and opinions expressed are, however, subject to change without notice based on market and other conditions and may differ from opinions expressed in other businesses and activities of RegentAtlantic. Descriptions of RegentAtlantic’s process and strategies are based on general practice and we may make exceptions in specific cases.

RegentAtlantic does not provide legal or tax advice. Please consult with a legal and or tax professional of your choosing prior to implementing any of the strategies discussed in this article.

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