Author Topic: Very Basic Questions  (Read 2141 times)

shadowmoss

  • Handlebar Stache
  • *****
  • Posts: 1158
Very Basic Questions
« on: July 23, 2012, 11:07:13 AM »
I have a couple of very basic investing questions.  I will investigate more deeply when I have money to invest, currently poised to be end of the year when I pay off the rest of the consumer debt.

1.  What is the time reference between 'short' and 'long'.  I know that the tax rates change when an investment moves from short to long.

2.  If dividends are reinvested do they accrue a current tax liability, or do they just add in to the base?  This would be in a regular taxable account.

I plan on studying a lot more before jumping into (again) investing.  Right now all money is going to debt repayment, but next year will be the year I start. 

grantmeaname

  • Magnum Stache
  • ******
  • Posts: 4862
  • Age: 27
  • Location: NYC
  • Cast me away from yesterday's things
Re: Very Basic Questions
« Reply #1 on: July 23, 2012, 11:16:47 AM »
1. For capital gains tax, the dividing window between short and long is a year. Is that what you're referring to?

2. Dividends are taxed as earned income even if they're reinvested. Edit: until the end of the year qualified dividends are taxed like long-term capital gains. Starting 1/1/13, they're taxed like earned income again.
« Last Edit: July 23, 2012, 11:20:16 AM by grantmeaname »

shadowmoss

  • Handlebar Stache
  • *****
  • Posts: 1158
Re: Very Basic Questions
« Reply #2 on: July 23, 2012, 05:42:10 PM »
Thank you, yes, that is what I wanted to know.  At one time a long time ago I was a member of an investing club.  I'd forgotten the basics, though.  When I get ready to invest again I'll join over at BetterInvesting.org again and go through their investing class again.