Tax information

The IRS currently considers cryptocurrencies "property" rather than currencies, which means they're treated a lot like traditional investment (such as stocks). Selling at a profit triggers capital gains tax, while selling at a loss may allow you to take deductions. To learn more, check out our crypto tax guide.

Taxable income is income the IRS can tax you on. When we hear taxable income, we generally think of wages from a job or freelance work. Here are some additional income sources you can be taxed on: 

• Interest income, whether from a savings account or bonds 
• Dividend income 
• Investment income, like short-term and long-term capital gains 
• Rental income from a property you own 
• Capital gains on the sale of a home (though there's an exemption that applies first) 
• Unemployment benefits 
• Severance pay 
• Lottery winnings and other prizes 
• Gambling winnings 
• Alimony for agreements entered before 2019
• Jury duty costs 
• Pension payments (though there are exceptions) 
• Social Security benefits (there are exceptions for lower-income seniors) 
• Traditional retirement plan withdrawals 
• Settled debts where a portion of what you owe is forgiven (there are exceptions for bankruptcy filings)

Tax-loss harvesting allows you to sell investments that are down, replace them with reasonably similar investments, and then offset realized investment gains with those losses. The end result is that less of your money goes to taxes and more may stay invested and working for you. 

Trade date

ETFs generate relatively little in the way of taxable capital gains compared to traditional mutual funds because they do not frequently buy and sell underlying assets. They also do not have to sell assets and create taxable capital gains in order to meet redemptions.

Married couples can file taxes as married filing jointly. This can lead to tax savings for some taxpayers in the middle of the income spectrum.

Yes, the IRS allows early distributions, without assessing the 10% penalty, under certain circumstances.

Roth IRAs have some tax advantages. Since contributions are made after taxes, you can withdraw those contributions any time tax-free and penalty-free. Once you reach age 59½ and meet the 5-year requirement, you can also withdraw earnings tax-free and penalty-free.