Question:
Like profits from the sale of stock and dividends from a cd/bank account/stock/mutual fund? The reason I am asking is because I want to stay in a lower tax level and I might increase my tax deffered IRA account inorder to stay in the lower level. I am getting pretty close.
Answer:
Capital Gains
Profits from the sale of stock: Capital Gains.
Interest on a CD or bank account: Interest income
Dividends on mutual fund: Dividends
Regardless of where your investments are recorded, you can reduce your taxable income by increasing IRA contributions as allowed.
Long-term (over 1 year) capital gains and qualified dividends will usually not increase your tax bracket. Short-term capital gains and interest income are taxed at your regular rate and may put you in a higher bracket.
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