Tax tips for investors

When you make money on your investments—whether it's stocks, savings, or cryptocurrency—you'll likely have capital gains or interest to report on your taxes. Miguel Burgos, CPA and TurboTax Live expert, tells taxpayers what to be aware of.

Watch the video above or read the transcript below.

Video transcript:

Tracy Byrnes: 2023 surprised a lot of people. The stock market was up and it was flying at some point. So your investment accounts, your retirement accounts, are up. You may have capital gains to report on your tax return. What do you do? Miguel Burgos, CPA TurboTax Live expert, is here with us to explain how we can get our tax bill down while benefiting from these fabulous gains.

Miguel, what do you do with gains on one side, losses on the other?

Miguel Burgos: Well, Tracy, first of all, they need to first get their tax form, 1099-B. That's a tax form that reports all of your sales. When did you buy it, for how much, what kind of stock, or what kind of bond? When did you sell it and for how much? And based on that, you're going to determine what are your gains and how you're going to handle it through your tax return.

But additional to that, they need to remember, if they have a capital gain because they had a sale of any capital asset, including stock, when they use TurboTax and services like TurboTax Live, will help them to determine: is it a short-term tax at an ordinary tax rate, or is it a long-term capital gain that can be taxed at a preferential tax rate, which means that it's taxed at a lower percentage? Or in some instances it's not taxed at all. It's taxed at 0%.

Additional to that, if they have any loss, they can offset some of their gains with other capital losses. And also, they're allowed to take up to $3,000 of those losses against their ordinary income to reduce their ordinary income and also reduce their tax. And also, if they don't get to reduce or to deduct all of that loss because they have more than $3,000, they are allowed to carry over that to the following tax season.

So it's something to keep track of and make sure that you look into, and that if you use TurboTax we'll make sure that we ask the right questions and we provide you enough expertise to make sure that you don't miss any of these opportunities.

Tracy Byrnes: Yeah, because this can be really difficult to keep track of, especially the carry-forward losses and stuff. But I can import my trades, is that right, from one—from my brokerage firm, so to speak?

Miguel Burgos: That's correct, Tracy. And actually with TurboTax, you have the best of two worlds. You have technology. You have expertise. You can talk to real people. And with technology now, we have the ability to partner with many brokers and banks and financial institutions, where taxpayers can actually import up to 10,000 stock transactions and up to 20,000 cryptocurrency transactions.

So this can be automatically electronically imported, and they don't have to keep track of every single one of those transactions and enter every single one of them manually. And that should really help the taxpayers to report accurately their capital transactions, and to make the best out of it when it comes to their tax refund.

Tracy Byrnes: 100%. Now you mentioned crypto. We might as well talk about it. What do people need to know about their crypto trades? They're not free.

Miguel Burgos: Correct. I mean from the IRS perspective and the Internal Revenue Code, when it comes to virtual currency, for them it's like a capital asset. Perhaps it's a newer asset compared to stocks and bonds and many other capital assets. But the tax laws that we apply are the same. So if you sold cryptocurrency during the year, it is likely that you have triggered a taxable event, or an event that you have to report on your tax return.

Actually, the newer versions of the Form 1040 for federal taxes actually have a box where you report if you have any sort of cryptocurrency transaction. But once again, if you had any of those transactions during 2023, reach out to the TurboTax Live experts. We have TurboTax Premier. We can help you with that. And we can make sure that you fulfill your responsibility, but that you also understand what's going on with your taxes.

Tracy Byrnes: Right, because again, it's complicated. And finally, before I let you go, interest rates were also on fire last year. A lot of people had money in high-yield savings accounts, were in CDs with great interest rates. What do they need to know about all that interest they earned last year?

Miguel Burgos: That's right now a very, very important topic right now, Tracy. And the reason is we notice, or we had during 2023 a significant increase on interest rates. So many banks were paying 4% or 5%, perhaps even more on interest rates. So many taxpayers transferred money from their savings account to a CD or to any sort of high-yield savings account.

So we have a lot of taxpayers that this year will have a significant amount of interest income. Remember, first, it is likely that you will get a form 1099-INT from your financial institution. Second, this is considered ordinary income that you will have to report on your tax return.

So if you were one of those taxpayers that took the opportunity and transferred some money into a CD and generated some interest income during 2023, don't forget to look for that 1099-INT and to report that on your tax return.

Tracy Byrnes: Yeah, a lot of people are going to be pleasantly—unpleasantly—surprised by that. Miguel Burgos, CPA TurboTax Live expert, thank you for helping us.

Miguel Burgos: It's always a pleasure to help the taxpayers.