Did you use some of your extra cash to invest in the stock market? If so, you may have received a large tax bill that you weren’t expecting. When investing your hard earned cash, remember two things:

• Securities in which you receive dividends or earned interest, for example a CD, are subject to taxation as income on the money you receive. However, if you do not receive any payments from the investment, you are not taxed, regardless of if the value of the investment increases.

• One year is the amount of time used to distinguish long-term from short-term capital gains. Short-term capital gains are taxed at a higher rate than long-term gains, so keep this in mind when selling your investments. For example, if you buy shares on November 12^th, and decide to sell them the following year, you will be taxed more if you sell the share on November 11^th, as you’ve held the investment less than a year. IF you wait to sell until November 13^th, the tax can significantly decrease as the shares transfer to a long-term asset.

You shouldn’t rely on your tax information to make your investments, but you should be aware of how different actions will affect the amount you pay. By knowing what to expect when you perform activity on your portfolio, as well as what happens when you receive dividends, you can avoid a surprise at tax time.