A national tax study by BMO Harris Financial Advisors, released last week, found that although many taxpayers confidently prepared their own returns, they felt less smart about tax-efficient investing.
Forty-eight percent of those surveyed did their own tax returns, and 83% were confident that their completed tax returns would take advantage of all of the tax deductions, tax credits or other tax savings that might be available to them.
However, 45% of respondents admitted they didn’t know much about investment solutions designed to reduce overall tax liability, including protecting their investments from tax liability and transitioning them in a tax-efficient manner to the next generation.
Only 44% of survey respondents understood how capital gains were taxed, and 47% understood how dividend income was treated for tax purposes.
Pollara conducted the online survey of 1,000 Americans 18 and older between March 7 and March 10.