Lesson 9.5 Investment Taxes July 2011Copyright © 2007-2011 … REMTECH, inc … All Rights...

Lesson 9.5Investment Taxes

July 2011 Copyright © 2007-2011 … REMTECH, inc … All Rights Reserved 1

Introduction

The largest investing expense you will have is taxes.

Investing is the way average individuals increase their personal wealth.

Part of the return for your investments will be used to pay taxes.

Knowledge of investing and taxes will allow you to minimize your investment taxes

Taxes should not keep you from investing.



Objectives

• Identify the 2 sources of income most people will have

You should be able to do the following after completing this lesson.

• Discuss why investment income is important during retirement

• Describe when a capital gain or loss is realized

• Review the difference in a short and a long-term capital gain

• Explain the difference in a tax-free and a tax-deferred investment

• List the current tax rates for capital gains

• Identify some popular tax-deferred investments

• Discuss the tax advantages of owning a home

• Define investment income, earned income, unearned income, capital gain, capital loss, capital gain taxes and other key terms introduced in this lesson.



9.5.1 – Sources of Income

• How many sources of income most individuals have

• How much in Social Security benefits the average person can expect to receive

• How much of your retirement income will come from your investments

In this section, you will learn

• How Social Security benefits relate to retirement income

• How important investment income is during retirement



9.5.2 – Types of Income

• How to classify your income

• What earned income is and where it comes from


• What unearned income is and where it comes from

• How unearned income is taxed

• When the different capital gains tax rates are used



9.5.3 – Capital Gains

• What investors want to happen to their investments

• When capital gains taxes are paid

• When a capital loss is realized


• What a capital gain is

• What a capital loss is

• How to calculate capital gains taxes

• The affect inflation has on capital gains



9.5.4 – Capital Gains Taxes

• What capital gains taxes are and when they began• Who collects capital gains taxes

• When capital gains taxes are paid


• What short and long-term means to capital gains

• When a capital gain or loss happens

• How to calculate capital gains taxes

• Capital Gains Taxes Example

You will run the following Interactive Example



9.5.5 – Tax-free Investing

• Examples of investments having a some degree of being tax-free

• What tax-free investing is


• The different degrees of tax-free investing



9.5.6 – Tax-deferred Investing

• What deferring the paying of taxes means to you

• What tax-deferred investing is

• Examples of popular tax-deferred investments


• What tax savings are and why they’re important to you

• How tax-deferred investing differs from tax-free investing



9.5.7 – Real Estate

• How homes have increased in value over the years

• How buying a home affects your income taxes

• The tax advantages for those owning a home as opposed to those that don’t own a home


• What home appreciation is

• How capital gains taxes play into homeownership

• Why buying a home is considered an investment



Discussion Questions

What is the advantage of claiming a long-term capital gain over a short-term capital gain?

Does inflation have an affect on the amount of capital gains taxes you will have to pay on your investments?

Lesson 9.5 Investment Taxes July 2011Copyright © 2007-2011 … REMTECH, inc … All Rights...

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Transcript of Lesson 9.5 Investment Taxes July 2011Copyright © 2007-2011 … REMTECH, inc … All Rights...