How to Account for Investment Income

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Investment income that is derived from stocks, bonds and mutual funds needs to be reported to the IRS. Find out how to record money that has come in above capital gains with help from a registered financial consultant in this free video on investing and money management.

Part of the Video Series: Investment Basics
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Video Transcript

This is financial adviser Patrick Munro talking about how to account for investment income. Investment income that is derived from investing in stocks, bonds, mutual funds, what have you, is required by the IRS that you keep a record of the amount of money coming in that's over and above what you invested that's called capital gains. Every year, you're taxed at a fixed rate -- currently, 15 percent on your capital gains. So it's important to have a true accounting of the amount of trades that you did and how much you made as a result of those trades. And this is an accounting for investment income. If you fail to keep good books and whatnot on this investment income, you can run into a tax snag with the IRS and that will result in penalties that'll be faced that you have to pay, and you certainly don't want that. It's good to work with a broker that has a pure list accounting system that they pass along to you and they give you reports. But then again, you have to be prepared for that service and being able to pay for it. This is financial adviser Patrick Munro talking about how to handle your account for an investment income.


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