As we get closer to the April 15 tax-filing deadline, you may be wondering about how your actions can affect the amount of taxes you pay.

Of course, you don’t have total command of some key tax-related components, such as your earned income. But one area in which you do have a degree of control is your investment-related taxes.

And since 2014 was a decent year for the financial markets, you may have some gains.

If you decide to sell some of your investments to “lock in” those gains, what would be the tax consequences?

Essentially, the answer depends on two variables: your tax bracket and how long you’ve held the investments.

Our tax code rewards investors who hold their investments for longer than one year. Consequently, short-term capital gains — earned on investments held for less than one year before being sold for a profit — are taxed at an individual’s ordinary income tax rate, which for 2014 can be as high as 39.6 percent.

However, long-term capital gains, earned on investments held one year or longer, are taxed at just 15 percent for most taxpayers and 20 percent for those in the 39.6 percent bracket. (At this tax bracket, a 3.8 percent Medicare contribution tax may also apply to long-term gains, so the top capital gains rate would be 23.8 percent.) You’ll need to check with your tax adviser on your specific situation.

From a tax standpoint, you may be better off keeping your profitable investments at least one year before selling them. But are there other reasons to hold investments for the long term?

In a word, yes. For one thing, if you are constantly buying and selling investments, you won’t just incur taxes; you’ll rack up commissions and fees that can eat into your investments’ real rate of return.

Also, if you are always buying and selling, you may be doing so for the wrong reasons.

You might be chasing after “hot” investments, even though by the time you buy them, they may already be cooling off. They may not even be right for your needs. Or you might decide you need to “shake things up” in your portfolio because you haven’t liked what you’ve seen on your investment statements for a particular time stretch. But if the overall market is down, it tends to drag everything down with it — even quality vehicles that still have good prospects.

Rather than chasing after hot stocks or reacting to short-term price movements, you may be better off by following a “buy-and-hold” strategy in which you purchase investments appropriate for your needs and then hold those investments for the long term.

Of course, “buy and hold” does not mean “buy and forget.” You may still need to make transactions, but only if it’s really necessary — such as when an investment is no longer appropriate for your investment goals.

If you want to cut down on your capital gains taxes, holding quality investments for the long term makes sense.

As for an investment strategy, a buy-and-hold approach can work well for you — long after tax season has ended.

This article was written by Edward Jones on behalf of your Edward Jones financial adviser. 

This article originally appeared on Crestview News Bulletin: FINANCIAL FOCUS: Holding investments long term can be less 'taxing'

CRESTVIEW — Yvonne Shanklin, an Edward Jones financial adviser in Crestview, is sponsoring a tax-free investing seminar on Thursday.

The seminar is 6-7:30 p.m. Feb. 19 at Coach N Four Steak House, 114 John King Road.

Dinner will be provided. Call Marcia at 682-2497 for more information.

This article originally appeared on Crestview News Bulletin: Tax-free investing seminar set Thursday

CRESTVIEW — Radio Station WYZB/NASH FM105.5 wants couples from across the Emerald Coast to celebrate Valentine’s Day by unofficially renewing their wedding vows during The NASH FM 105.5 “Drive Thru Renew.” 

Everyone knows Las Vegas is known for their wedding chapels and drive-through weddings. NASH FM 105.5 is using Feb. 14 as a modified version of the Vegas-style wedding.  

“Drive Thru Renew” is a fun Valentine’s Day ceremony to re-unite couples…with one couple actually winning a  grand prize package including overnight accommodations at Four Points By Sheraton/Destin-Fort Walton Beach and a new mattress from Jazzi Rae’s in Crestview," an event spokesperson said. 

Saturday, from 10 until noon, NASH FM 105.5 will be at Lewis Diamond Gallery, 3670 South Ferdon Boulevard in Crestview. WYZB’s Midday Host, Skip Davis, will serve as the Non-Pastor and administer the special-edition renewing of vows. 

Couples will receive flowers, wedding cupcakes, a special certificate commemorating the ceremony, and more.

This article originally appeared on Crestview News Bulletin: Couples can drive through, renew their vows on Saturday

You need to save and invest as much as possible to pay for the retirement lifestyle you’ve envisioned.

But your retirement income also depends, to a certain degree, on how your retirement funds are taxed.

And that’s why you may be interested in tax diversification. To understand the concept, you need to be familiar with how two of the most important retirement-savings vehicles — an IRA and a 401(k) — are taxed. Essentially, these accounts can be classified as “traditional” or “Roth.”

When you invest in a traditional IRA or 401(k), your contributions may be tax deductible and your earnings can grow tax deferred. With a Roth IRA or 401(k), your contributions are not deductible, but your distributions can potentially be tax-free if you meet certain conditions.

(Keep in mind, though, that to contribute to a Roth IRA, you can’t exceed designated income limits. Also, not all employers offer the Roth option for 401(k) plans.)

Of course, “tax free” sounds better than “tax deferred,” so you might think that a Roth option is always going to be preferable.

But that’s not necessarily the case.

If you think your tax bracket will be lower in retirement than when you were working, a traditional IRA or 401(k) might be a better choice, due to the cumulative tax deductions you took at a higher tax rate.

But if your tax bracket will be the same, or higher, during retirement, the value of tax-free distributions from a Roth IRA or 401(k) may outweigh the benefits of tax deductions you’d get from a traditional IRA or 401(k).

So, making the choice between “traditional” and “Roth” could be tricky.

But here’s the good news: You don’t necessarily have to choose, at least not with your IRA. That’s because you may be able to contribute to a traditional IRA and a Roth IRA, assuming you meet the Roth’s income guidelines. This allows you to benefit from both the tax deductions of the traditional IRA and the Roth IRA's potential tax-free distributions.

And once you retire, this “tax diversification” can be especially valuable.

Why?

Because when you have money in different types of accounts, you gain flexibility in how you structure your withdrawals — and this flexibility can help you potentially increase the amount of your after-tax disposable income.

If you have a variety of accounts, with different tax treatments, you could decide to first make your required withdrawals (from a traditional IRA and 401(k) or other employer-sponsored plan), followed, in order, by withdrawals from your taxable investment accounts, your tax-deferred accounts and, finally, your tax-free accounts.

Keep in mind, though, that you may need to vary your actual sequence of withdrawals from year to year, depending on your tax situation.

For example, it might make sense to change the order of withdrawals, or take withdrawals from multiple accounts, to help reduce taxes and avoid moving into a different tax bracket.

Clearly, tax diversification can be beneficial. So after consulting with your tax and financial advisors, consider ways of allocating your retirement plan contributions to provide the flexibility you need to maximize your income during your retirement years.

This article was written by Edward Jones on behalf of your Edward Jones financial adviser. 

This article originally appeared on Crestview News Bulletin: FINANCIAL FOCUS: Tax diversification can help you manage retirement income