Thanks to 1 Obscure Rule, I'm Making More Money From These 2 Dividend Stocks
When my family was young, I bought dividend stocks to provide an income stream just in case I was out of work for any reason. With my daughter just completing her second year in college, I no longer need to worry about accessing the potential income stream I've created. (It has largely been dividend reinvested anyway.) I've done the heavy lifting, but now I'm doing some fine-tuning that has both reduced the taxes I pay and increased the income that hits my accounts. You might want to know about the somewhat obscure rule that's letting me achieve this goal.
If you're looking to avoid paying taxes on dividend income, a tax-advantaged retirement like an IRA is going to be your friend. Of the options available, a Roth IRA is likely to be the best choice. While you have to put after tax money into a Roth, the dividends and capital gains inside the account accrue tax free. And, more to the point, since you already paid tax on the money that went in, you don't have to pay taxes on the money that you eventually pull out.
Image source: Getty Images.
Source Fool.com
