Maximize Profits: Leveraging Tax-Efficient Accounts for Dividend Stocks
The accounts that matter most for saving on taxes
If you're looking to avoid paying taxes on dividend income, a tax-advantaged retirement like an IRA is going to be your friend. Of the options available, a Roth IRA is likely to be the best choice. While you have to put after-tax money into a Roth, the dividends and capital gains inside the account accrue tax-free.
Put simply, dividend stocks in a Roth IRA or other Roth account can provide you with ongoing tax-free income in retirement. Loading up a Roth with high-yield dividend stocks can be a good long-term choice from a tax perspective.
- Consider shifting real estate investment trusts (REITs) to Roths for tax efficiency
My latest tax moves involve Canada
Not having to pay Canadian dividend taxes can result in a 15% income boost when moving Canadian dividend stocks to tax-advantaged retirement accounts. By transferring certain stocks like Enbridge and Toronto-Dominion Bank to Roths, investors can increase income and set up a long-term tax-free income stream for retirement.
- Efficiently tackle capital gains by capturing losses in other stock holdings
Little moves add up to big savings
Making small adjustments, such as strategically placing dividend stocks in tax-advantaged accounts, can lead to significant financial advantages. Leveraging tax-efficient accounts can result in substantial long-term returns and a tax reduction.