by Gene Walden
 If you’re looking for income with your investments, it’s important to remember that the investment with the highest stated rate of return may not necessarily put the most money in your pocket. Different income sources are often taxed at different rates, and understanding those tax rates can help you get the most for your investment in terms of real dollar returns.
For instance, bank certificates of deposit and corporate bonds and bond mutual funds are typically taxed at your normal income tax rate. Most stock dividends are taxed at a lower rate, not to exceed 15 percent. Bonds issued by the federal government are exempt from state income taxes and most municipal bonds are exempt from federal income taxes and are often exempt from state taxes, as well.
Before you put your money in an income investment, you should talk with your financial advisor to see which option would give you the best return in real dollar terms. |
