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Taking Advantage of Hidden Tax Opportunities

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    Personal Capital CEO Bill Harris on how to reduce your tax burden.

  • Duration 4:30
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Do you look at your doing your taxes this weekend right David.

I -- we're all tired of paying too much in taxes but we have an expert -- you -- -- listen that this is not an expert who says.

A few simple steps can save -- a lot of money.

And it -- have anything to do with tax policy your not taking advantage of existing tax opportunities.

Joining us now out of Fox Business exclusive is -- Harris as the CEO personal capital.

He's also the former CEO of Intuit and PayPal which of course -- quicken and Turbotax or just a person to talk to wanted to elect this.

-- -- say that Americans are always complaining about we want more tax cuts but they're not even capitalizing on what's already there for them.

Well it's certainly true that you can save a lot particularly in your investment portfolio if you think not about.

Pretax performance but rather after tax performance -- after all it's not what you -- It's what you keep that counts OK so -- talking specifically for our investor audience speaking about.

Tax deferred accounts vs taxable accounts the portfolio.

Plays explain this graphic but I heard them.

Just as we took off but if we can put -- back -- people can look at it.

Sure they -- that you've got -- everybody has said Ira.

841 K we hope we hope.

They have tax deferred opportunities as well as taxable opportunities typically what most investors do is put.

Similar mix of assets in both buckets.

Really what you want to do is put your income generating assets.

Into tax deferred accounts because they are taxed at higher rates.

Put the capital gain generating assets in taxable accounts -- first volume that lower rates but secondly if you play it Smart.

You have the control over when you realize that those taxable events quickly give us an example of taxable what you're talking about income generating -- these dividend yielding stock show dividends although some dividends are are qualified dividends.

But certainly any bonds any thing that generates interest.

Those go into that the tax.

Deferred accounts for those of us who have mutual funds -- avoid high turn over rates explain what that means yes well so many mutual funds they trade frequently.

And what happens is that some managers are are -- pursuing top level performance and they're trying to make.

In 08% 9% in a given year.

In in in trying to do so -- trading frequently many times the turnover rates are more than.

One acts in other words they turn more than the entire portfolio within a given year and by the way every time you make the trade to get taxed on any kind of -- that -- -- -- that's the problem.

That's the problem because every time the trade you.

Realizing the capital gains and that gets distributed to the -- idea owners of the mutual fund every year.

OK watch those fund turnover rates and then by individual securities at year end instead of funds.

Explain.

This mistake people make do not buy into a mutual fund in November December why well it's easy.

They have been selling.

During the course of the year.

They have been just -- they have been accumulating gains during that year.

Some of those gains may have been accumulated from positions that they purchased years ago so it's a lot of built up gain.

And they distributed all.

To the holders on record as of November or December of each year so you could buy a brand new stock and all of a sudden get a tax bill.

For gains that you never saw that did not find them wait and pray and wait -- the beginning of the next year that's correct most prominent mistakes investors make when they're doing their taxes or at least -- from plant.

Well you know first of all the most prominent mistake is that they don't plan.

I used to run a company that that -- Turbotax that tax preparation software sold lots of copies of Turbotax.

And we always said -- we can say the couple hundred dollars for people.

Because we can help them find deductions but we could save thousands if we could get out front on the tax planning process.

And help them through the year.

We built a product a couple of times nobody nobody used so the first thing you do you -- -- you have to get aggressive and take control and and make a plan.

The second thing you can do is.

Is -- try and manage when you realize the losses.

Harvest losses in two years when you needed to shield gains -- big gains until the following year.

Things of that nature are you busy this weekend because David David advertising it would -- a partisan.

-- -- -- -- Up.

Bill -- is that CEO up personal capital thank you so much thank you have a good weekend at Camp David --

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