How Dividends Are Taxed and How to Reduce Your Tax Bill

Answers to tax questions are never quite as straightforward as you want. Toby Mathis and Jeff Webb of Anderson Advisors talk about how dividends are taxed (how to reduce your tax bill) and answer additional tax-related questions. Submit your tax question to taxtuesday@andersonadvisors.

Highlights/Topics:

• What are the tax implications of selling stock and using the proceeds to invest in real estate? It depends. If you sell some stock and then go out and buy some real estate, one actually has nothing to do with the other, except in one circumstance - if you buy real estate in a qualified opportunity zone.
• What's the best way to avoid taxes when getting income from forex trading? The IRS is actually very hard on forex traders. There's one tool called, the 988 election. When you do forex trading, it's subject to the 1256 rules. No matter when you bought and sold it, 60% gets treated as long-term, 40% as short-term.
• Can I get a hard money loan with no collateral? Maybe, but it depends solely upon the lender. A hard money loan is money from a private lender, not from a bank.
• I bought a real estate course in April 2022 and then started my LLC in May 2022. Can I write-off the cost of the course as a business expense on my taxes? It depends primarily on how your LLC is being taxed. If it's being taxed as a corporation, a C Corp, you can use those costs and the C Corp should reimburse you.
• I have a nonprofit mentoring business that I often fund with my personal finances. Is there any way that I can write this money off on my taxes? Instead, let the nonprofit pay its own expenses. Every time you give them cash, they should give you a receipt. Anytime you fund a nonprofit, it's going to be a charitable donation. As long as you document it, then the organization is paying that expense.

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Resources:

Wills and Trusts

https://andersonadvisors.com/living-trusts/

Opportunity Zones

https://www.irs.gov/credits-deductions/businesses/opportunity-zones

1031 Exchange

https://www.investopedia.com/financial-edge/0110/10-things-to-know-about-1031-exchanges.aspx

Wash Sale/Loss Rule

https://www.investopedia.com/terms/w/washsalerule.asp

Capital Gains and Losses (Schedule D)

https://www.irs.gov/forms-pubs/about-schedule-d-form-1040

Entity Formation

https://andersonadvisors.com/entity-formation/

Anderson Advisors

https://andersonadvisors.com/

Anderson Advisors on YouTube

https://www.youtube.com/channel/UCX5nh607M8hSBLiMB9MgbIQ

Anderson Advisors on Facebook

https://www.facebook.com/AndersonBusinessAdvisors/

Anderson Advisors Podcast

https://andersonadvisors.com/podcast/