Did you know that you can sell a stock at a profit and pay next to nothing in capital gains tax? Or that you may not owe any tax on dividends you receive? It's true. The Tax Increase Prevention and Reconciliation Act (TIPRA), which was signed into law in early 2006, reduces capital gains and dividend tax rates even further down to 0% in some cases. Read on to find out more and how you can save money through proper planning.
Capital gains tax must be paid when you sell an asset for a profit. For instance, if you buy a stock at $10 per share and sell it two years later for $15 per share, there is a $5 per share gain that is subject to tax. Most of us know that the maximum capital gains tax rate is 15%. But depending on your income, your capital gains rate might be 0%.
Your capital gains tax rate is based on your overall income tax bracket. If your overall tax bracket is greater than 15%, then your capital gains will be taxed at the maximum capital gains rate of 15%. Even if you are in the 35% tax bracket, you still only pay 15% on capital gains. But if you are in the 10% or 15% overall income tax bracket then your capital gains tax rate is only 5%!
There is also a big difference between the way that dividends and interest are taxed. Dividends are paid by preferred and common stocks. Interest is paid on bonds and Certificates of Deposit. Interest is taxed at your overall income tax rate, as are any gains from annuities. But dividends aren't. Just like capital gains, qualified dividends are taxed at a maximum rate of 15%. If you are in the 10% or 15% overall income tax bracket then your dividend tax rate is also only 5%!
TIPRA, passed in early 2006, changed this. Between 2008 and 2010, the maximum dividend and capital gains tax rate stays at 15%. But it drops to 0% for those in the 10% or 15% overall tax brackets. You can have capital gains and receive dividends and NOT pay any tax on them!
Assuming 2006 tax rates, you can have $61,300 in income (married filing jointly) and still be in the 15% overall tax bracket. You can have $60,000 in income and you will only pay 5% in tax on dividends and capital gains! Between 2008 and 2010 you wouldn't have to pay ANY tax on dividends and capital gains. It's the same for those who are single if they have $30,650 or less in income.
How should this affect your investments?
Regardless of your overall tax bracket, dividends and capital gains are more valuable than interest because of the tax savings. Let's say that you have the option of putting $10,000 into a Certificate of Deposit at 5% or a preferred stock that pays a 5% dividend. At the highest overall tax bracket, you will owe about $175 in taxes on the CD interest, leaving you $325 to spend.
You will only have to pay about $75 in taxes on the dividend from the preferred stock, giving you $425 to spend. That,s $100 more just off of a $10,000 investment. In percentage terms, you have 30% more to spend with the dividend-paying investment than with the Certificate of Deposit.
For those in the highest tax bracket, to produce the same spendable amount, a Certificate of Deposit would have to earn around 6.25%, or 5.75% for those in the 25% tax bracket.
It's possible to find dividend-paying investments that currently pay far more than Certificates of Deposit. For instance, I use several stocks for my clients that pay dividends of 7-10%. They may fluctuate in value whereas a Certificate of Deposit does not, but properly diversified and managed, they are a great way to receive a larger income stream from your investments. When taxes are taken into account, the amount of spendable income is close to double that provided by the CD.
The bottom line is this. If you pay any income taxes at all, you are better off (tax-wise) receiving dividends and capital gains than interest. That's even more true in 2008 when the minimum capital gains and dividend rate drops to 0%.
What sells? Sex, violence and more sex. No doubt about it, these are the core of every movie the box office industry has seen. Sex in particular are selling like hotcakes. Nothing is too expensive for sex, which is why the adult movie industry ? particularly the adult pay per view is doing extremely well. Even porn stars are making names nowadays and are perceive as somewhat of a celebrity.
In the last decade, adult movies has taken a giant leap and has invaded the internet. When in the 80s people are trading video tapes among their friends and colleagues to watch these sexy porn, today, those sexy babes are just a click away ? and of course, one's credit card number. Not every website requires payment though, some website allow their viewers to download porn materials for free ? like RedTube for instance, the uTube-like porn site.
The exchange of these videos are in amazing numbers. No wonder a lot of business moguls want to have a share of this industry. These videos have been viewed by not ten or even a 100-- but some adult videos have been viewed a million times -- worldwide. Talk about exposure! This is just amazing ? even homemade videos can reach that number. Clearly, the world is getting smaller and smaller everyday. Imagine making a porn video today and having someone from China view the vid the very next day.
Yes, some people post their own sex videos and make money from it ? always ask for your partner's permission before doing so. People seem to love real people do their stuff and see how they take their partners to sexual heights. Adult videos are not only for fun, they can be useful as well. A lot of men watch porn videos to get new techniques and sexual position on which to experiment with their sex partners. Nobody wants a stale and repetitive sexual position, right? This is a way of learning new ways without actually cheating.
There is also the part where one can fulfill their own sexual fantasies. By watching videos where the male and female uninhibitedly make love in sensual locations can revved up the passion and result to a better sex life. Some couples even watch the steamy sex scenes together before doing the act themselves. This has become a part of their foreplay. By watching adult videos, they bring excitement and adventure into the sexual experience.
No wonder the adult movie industry is making a lot of money. And they should as they are giving people a lot of help and entertainment. In a way, it has become the teacher, counselor and mediator for couples ? making sure that everything is okay and that the two of them are happy and sexually satisfied. Some still frown at the idea of watching porn videos ? they see this as sleazy and cheap. But, art is art. And everybody is entitled to their own opinions. However, like everything else ? anything in excess is a bad thing.
Both Jeffrey Voudrie & Tommy Zen are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Jeffrey Voudrie has sinced written about articles on various topics from Financial Planning, Investments and Health Insurance. Nationally-syndicated financial columnist and Certified Financial Planner(R) Jeffrey Voudrie provides personal, in-depth money management services and advice to select private clients throughout the USA. He'll answer your financial question FREE at. Jeffrey Voudrie's top article generates over 165000 views. to your Favourites.
Tommy Zen has sinced written about articles on various topics from tax. John is author of this article on . Find more information about