Taxes & Earnings
The U.S. tax system is complicated and the rules surrounding it change frequently. The majority of the time, however, how you're taxed is based on the source of your income. Most earned income, which includes wages, interest and qualified withdrawals from a retirement plan, are taxed at a specific rate that is based on your filing status and tax bracket.
The profit or loss realized when you trade a security is taxed as a capital gain or loss. If you own the stock or bond for longer than one year, you will have a long-term capital gain when you sell it. If you own the security for less than a year before you sell, you will have a short-term capital gain. Short-term capital gains are taxed at your regular rate, while long-term capital gains are typically taxed at a lower rate than your earned income.
Interest paid on corporate bonds,
An important caveat is that tax-free investments typically offer lower yields than those that are taxed. Depending on your risk tolerance and financial objectives, taxable investments may be more appealing than tax-exempt government securities, especially in tax-deferred accounts.
Investors should consider the investment objectives, risks, charges, and expenses of mutual fund carefully before investing.A prospectus contains this and other information about the fund and is available through www.scottrade.com or through a Scottrade branch office. The prospectus should be read carefully before investing
Scottrade does not provide tax advice. This material is for informational purposes only. Please consult your tax or legal advisor(s) for questions concerning your personal tax or financial situation.