Taxes might be the last thing on your mind when it's sweltering outside, and many people are in vacation mode. However, a mid-year look at your taxes and investments can save you both money and stress come tax season. Here are three moves to make before the summer ends.
The amount your employer withholds from your paycheck for the IRS is not set in stone, and it's worth checking in once a year to see if you're paying roughly the right amount. That's particularly true if your situation has changed -- perhaps you got married, took on extra work, or had a baby. Fill out a new W-4 withholding form if there's anything that might affect your tax rate or entitle you to tax credits.
This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia.
Continue » The IRS has a Tax Withholding Estimator you can use to estimate your withholdings, and using it this summer can help you avoid getting hit with a larger-than-expected bill or even a fine if you've dramatically underpaid. On the flip side, if you are paying too much, you might be able to reduce the amount withheld and have more cash to spend or invest each month. With major U.S. indexes in record high territory, now may be a good time to rebalance your portfolio to manage risk and avoid drift.
For example, in my portfolio, CrowdStrike (NASDAQ: CRWD) has gained about 480% during the past three years. While it is still a high-conviction stock, cybersecurity stocks now make up an oversized part of my portfolio. There are a few ways I can rebalance, including directing new money to other sectors or reducing my CrowdStrike position.
However, if you sell stocks or ETFs held in a normal brokerage account, you may owe capital gains taxes on any profits. That's where tax-loss harvesting comes in, because you can offset any gains by realizing the losses on underperforming investments. The idea is to replace the sold asset with a similar, but not identical, investment.
Extract — continue reading at the source.
