How to Reduce Income Taxes on Mutual Funds

In order to reduce federal income taxes on your mutual funds, avoid buying mutual funds near the distribution date, buy index funds which typically have little to no capital gains or dividend distributions, buy a tax-managed mutual funds, or harvest other capital losses to offset your capital gains (If you have more capital losses than gains, you can deduct up to $3,000 of those capital losses from your earned income.  And if you still have losses left over, you can carry those over into the next tax year).   The full range of strategies to minimize your taxes on investment gains is explained in this article:

http://www.usatoday.com/story/money/columnist/waggoner/2013/10/31/the-horror-of-mutual-fund-taxes/3327981/

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