Tax Planning - J.P. Morgan Asset Management

Tax Planning

One easy way to maximize your return potential is to minimize taxes. By making tax-smart investment decisions, you can reduce the amount lost to the IRS each year and keep more of your earnings for current or future needs.


Growing need for tax relief


Higher total return potential

For investors in the highest federal tax bracket, taxes can reduce an 8% annual return to as low as 4.5%. Over time, that may mean the difference between reaching a financial goal and falling short.

The power of tax-advantaged compounding


Favorable tax rules


1Source: Tax Foundation, 2010

Strategies for cutting taxes

Offset taxable gains with losses

If your advisor recommends it, consider realizing investment losses before year-end to reduce capital gains taxes.

Donate and deduct

When donating an investment to charity, you can generally take a tax deduction for the full market value, meaning you avoid capital gains taxes on any appreciation.

Consider tax-free municipal bond funds

Interest income from municipal bonds is not typically taxed by the federal government or state in which a bond is issued.

Invest for dividends

While interest income is taxed at rates as high as 40.8% (37% tax rate plus 3.8% Medicare surtax), taxes on qualified dividends top out at just 23.8% (20% maximum rate plus 3.8% surtax).2

Maximize tax-advantaged accounts

Contribute as much as possible to tax-advantaged accounts for retirement or education. If you're 50 or older, you can make additional catch-up contributions to employer-sponsored retirement plans and IRAs.

Invest for the long term

Investments sold at a profit after more than one year qualify for favorable tax rates as long-term capital gains.

Consult an advisor

A financial professional or tax advisor can tell you if these or other strategies meet your individual needs.

2Qualified dividends are taxed at 0% if taxable income is below $77,200 for married filing jointly, $51,700 for head of household, or $38,600  for filing single or married filing separately; 15% tax rate if taxable income exceeds the 0% threshold but below $479,000 for married filing jointly, $452,400 for head of household, $425,800 for filing single, or $239,500 if married filing separately. The Medicare surtax of 3.8% is applied to the lesser of net investment income or the excess of modified adjusted gross income over $200,000 for single taxpayers and $250,000 for married couples filing jointly.

Learn more about taxes and your investments

Ready to get started?

For more specific information, you can visit, and refer to Publication 17: Your Federal Income Tax. Consult your advisor for helpful tips on building an investment portfolio to meet your tax management needs and other financial goals.

