Author: Arabian Media staff
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You must pay taxes on the money that’s withdrawn when you take a distribution from your traditional 401(k).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…
Key Takeaways Federal student loans are undergoing significant changes in 2025, with updates to repayment plans and income-based options.Borrowers may be forced to switch repayment plans, which could result in higher monthly payments. Income-driven repayment (IDR) plans are still in flux, and borrowers should know that switching plans may impact their payment amount and long-term forgiveness eligibility.Helping clients navigate their choices can provide value, reduce stress, and ultimately save money in the long run. Managing student loan debt in 2025 could be especially tough for federal borrowers. Interest rates are near-record highs and Income-Driven Repayment (IDR) plans are in flux. A…
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Key Takeaways Unpaid medical bills can hurt your credit score, turning a health issue into a long-term financial problem. Although the Consumer Financial Protection Bureau (CFPB) tried to stop medical debt from appearing on credit reports, a judge overturned the rule last month. If you’re facing large or surprise medical bills, you may be able to negotiate a lower amount or set up a payment plan with your health care provider. Health savings accounts (HSAs) and flexible savings accounts (FSAs) let you set aside pre-tax money to help cover medical costs. Unpaid medical bills can damage your credit, making it…
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The benefits of mergers and acquisitions (M&A) include, among others: Diversification of product and service offerings An increase in plant capacity Larger market share Utilization of operational expertise and research and development (R&D) Reduction of financial risk If a merger goes well, the value of the new company should appreciate as investors anticipate synergies to be actualized, creating cost savings, and/or increased revenues for the new entity. However, time and again, executives face major stumbling blocks after the deal is consummated. Cultural clashes and turf wars can prevent post-integration plans from being properly executed. Different systems and processes, dilution of a…