One easy way to maximize your return potential is to minimize taxes. By making tax-smart investment decisions, you can reduce the amount lost to the IRS each year and keep more of your earnings for current or future needs.
1Source: Tax Foundation, 2010
Strategies for cutting taxes
Offset taxable gains with losses
If your advisor recommends it, consider realizing investment losses before year-end to reduce capital gains taxes.
Donate and deduct
When donating an investment to charity, you can generally take a tax deduction for the full market value, meaning you avoid capital gains taxes on any appreciation.
Consider tax-free municipal bond funds
Interest income from municipal bonds is not typically taxed by the federal government or state in which a bond is issued.
Invest for dividends
While interest income is taxed at rates as high as 43.4% (39.6% tax rate plus 3.8% Medicare surtax), taxes on qualified dividends top out at just 23.8% (20% maximum rate plus 3.8% surtax).2
Maximize tax-advantaged accounts
Contribute as much as possible to tax-advantaged accounts for retirement or education. If you're 50 or older, you can make additional catch-up contributions to employer-sponsored retirement plans and IRAs.
Invest for the long term
Investments sold at a profit after more than one year qualify for favorable tax rates as long-term capital gains.
Consult an advisor
A financial professional or tax advisor can tell you if these or other strategies meet your individual needs.
2For investors in the 25%, 28%, 33% and 35% tax brackets the maximum rate is 15% plus, if applicable, the 3.8% Medicare surtax. The tax rate for the two lowest tax brackets, 10% and 15%, the tax rate on qualified dividends is 0%.
Learn more about taxes and your investments
- 2016 Exchange Traded Funds Estimated Capital Gains
- Qualified Interest Income (QII) Percentage for the JPMorgan ETFs (2016)
- 2016 JPMorgan Funds Estimated Capital Gain Dividends
- Section 19a Notice
- Section 19a Notice - MMkts
- Section 19a Notice Asset Allocation Funds
- Section 19a Notice JPMIT Funds
- Tax Special Report 2016
- Tax Special Report for IRA Required Minimum Distributions (RMD)
- J.P. Morgan Funds 2016 Distribution Notice
- J.P. Morgan Funds 2015 Distribution Notice
- J.P. Morgan Funds 2014 Distribution Notice
- J.P. Morgan Funds 2013 Distribution Notice
Active fund documents
- IRS Form 8937: JPMorgan Emerging Markets Local Currency Debt Fund
- IRS Form 8937: JPMorgan Global Unconstrained Equity
- IRS Form 8937: JPMorgan Hedged Equity Fund
- IRS Form 8937: JPMorgan Income Builder Fund
- IRS Form 8937: JPMorgan Limited Duration Bond Fund
- IRS Form 8937: Security Capital U.S. Core Real Estate Securities Fund
Ready to get started?
For more specific information, you can visit www.irs.gov, and refer to Publication 17: Your Federal Income Tax. Consult your advisor for helpful tips on building an investment portfolio to meet your tax management needs and other financial goals.
The information above is not intended to provide and should not be relied on for accounting, legal and tax advice or investment recommendations. The views and strategies described may not be suitable to all readers. Please contact your financial professional or tax advisor for additional information.
IRS Circular 230 Disclosure: JPMorgan Chase & Co. and its affiliates do not provide tax advice. Accordingly, any discussion of U.S. tax matters contained herein (including any attachments) is not intended or written to be used, and cannot be used, in connection with the promotion, marketing or recommendation by anyone unaffiliated with JPMorgan Chase & Co. of any of the matters addressed herein or for the purpose of avoiding U.S. tax-related penalties.