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.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.