Author: Arabian Media staff

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Dual citizenship allows individuals to be citizens of two countries at the same time. This means they can take advantage of certain benefits like property ownership and voting rights in two nations even though they may be taxed by both countries. You can become a dual national in the U.S. as long as the other country allows dual citizenship. Below, we explore what it means to be a dual citizen along with the pros and cons. Key Takeaways Dual citizenship allows you to hold citizenship in two different countries. Dual citizens can work and own property in both countries.Being a…

Bond Required Rate of Return Coupon Rate Cash Flow at End of Year 1 (Coupon) Cash Flow at End of Year 2 (Coupon + Principal – Tax) Net Present Value Cap. Gains Tax (15%) 4% 2% $2 $101.34 $95.62 Ordinary Income Tax (37%) 4% 2% $2 $100.38 (Tax = $100 – $95.62 x 0.37) $94.73 While an investor might pay $95.62 if only accounting for capital gains tax, the true value is much lower—only $94.73. At the time of purchase, the buyer must recognize whether the bond is subject to de minimis because the after-tax return could be substantially less…

State Income Tax vs. Federal Income Tax: An Overview The U.S. has a multitiered income tax system under which taxes are imposed by federal, state, and sometimes local governments. Federal and state income taxes are similar in that they apply a percentage rate to taxable incomes. However, they differ considerably regarding those rates and how they’re applied, and by the type of income that is taxable and the deductions and tax credits allowed. Key Takeaways The federal government and most states have income taxes. The rules and rates vary between individual states and the federal system. Federal taxes are progressive,…

Profits you make from selling an exchange-traded fund (ETF) are taxable just like the profits from selling a stock or withdrawing money from a mutual fund. Dividends received from an ETF are taxable as well. Key Takeaways Some but not all equity ETFs pay dividends to their shareholders.Not all ETF dividends are taxed the same. They’re broken down into qualified and unqualified dividends.Qualified dividends are taxed from 0% to 20%.Unqualified dividends are taxed from 10% to 37%.High earners pay additional tax on dividends but only if they have substantial income. Overview: ETFs and Taxes An ETF is a selection of…

You must pay taxes on the money that’s withdrawn when you take a distribution from your traditional 401(k). It’s subject to ordinary income tax based on your tax bracket. You must add a 10% early withdrawal penalty in most cases as well if you’re younger than 59½ when you take the distribution. A 401(k) distribution could also put you in a higher marginal income tax bracket. Key Takeaways Certain strategies can alleviate the tax burden associated with 401(k) distributions.Net unrealized appreciation and tax-loss harvesting can reduce taxable income.Rolling over regular distributions to an IRA avoids automatic tax withholding by the plan…

Avoiding taxes completely isn’t legal or desirable; money has to come from somewhere to fund the social services and public works on which your community depends. While you can’t avoid taxes entirely, it’s possible to lower your tax bill through strategic financial moves. You don’t have to be a top earner, either. Average, middle-class earners can use six strategies to lower their income taxes legally. Key Takeaways The interest income from municipal bonds is generally free from federal income tax. You can use pretax dollars to contribute to certain retirement and employee benefit accounts. Business owners can deduct many expenses,…

If your primary investment objective is to preserve capital while generating a tax-free income stream, municipal bonds are worth considering. Municipal bonds (munis) are debt obligations issued by government entities. When you buy a municipal bond, you are loaning money to the issuer in exchange for a set number of interest payments over a predetermined period. At the end of that period, the bond reaches its maturity date, and the full amount of your original investment is returned to you. Key Takeaways Municipal bonds are good for people who want to hold on to capital while creating a tax-free income…

Advocates of tax cuts argue that reducing taxes improves the economy by boosting spending. Those who oppose cuts say they only help the rich and reduce the government services on which lower-income individuals rely. Regardless of opinion, tax cuts reduce government revenues and lead to budget deficits or growth in government debt. Below, find out how tax cuts affect the economy. Key Takeaways Tax cuts reduce government revenues and create a budget deficit or higher sovereign debt.The federal tax system relies on several taxes to generate revenue, including income tax and payroll tax.Proponents of tax cuts argue that cuts increase an…