The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: shadowmoss on July 23, 2012, 11:07:13 AM
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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.
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1. For capital gains tax, the dividing window between short and long is a year (http://en.wikipedia.org/wiki/Capital_gains_tax_in_the_United_States). 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 (http://en.wikipedia.org/wiki/Qualified_dividends) are taxed like long-term capital gains. Starting 1/1/13, they're taxed like earned income again.
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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.