Use the IRS Pub. 550: Investment Income and Expenses website as needed for the following questions.
Two separate taxpayers, each age 70, earn the following income from investments in their non-retirement account. Akira is in the highest tax bracket, and Julio is in the lowest tax bracket. What are the differences in taxes they pay on each source of income?
								Akira		Julio
Income	Amount	Tax	Net Income	Tax	Net Income
Bank Interest	$ 450
Qualified Dividends	$ 1,200
Ordinary Dividends	$ 1,200
Long-term Capital Gains	$ 5,000
Short-term Capital Gains	$ 6,000
Series I Savings Bond Cashed in for Higher Education	$ 10,000
Municipal Bond Interest	$ 900
TOTAL	$ 24,750

How can Akira and Julio change their portfolio to reduce taxes? Show your calculations to present the differences in taxes and strategies?
Would it be more tax efficient for Akira and Julio to withdraw $10,000 from their 401k or their taxable brokerage account? Why?

Answer rating: 100% (QA)

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