This Chart Shows How Major Investment Accounts Are Taxed
Investing isn’t nearly as scary as it sounds. But all of the tax rules for different investment accounts can be overwhelming. The Bankrate folks break down the basics in one simple diagram.
Some investment accounts are subject to taxation , while others, such as an IRA, are tax-exempt . You will pay taxes anyway, but tax breaks simply mean that you can either deduct your contributions from taxes now or withdraw your money tax-free later.
But that doesn’t mean you won’t have to pay taxes at all. We have already told you the details of how taxes work with investments earlier . But if you’re looking for a quick reference guide, the Bankrate chart will tell you what the rules are and how you will be taxed. You can also check out the full article to learn more about each of these account types.
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