Khane
Got something right about marriage
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Yea its all long term. The tax brackets are still marginal for long term correct?
Investing General Discussion
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Yea its all long term. The tax brackets are still marginal for long term correct?
Blazin
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yes but i definitely wasn't clear, it's your taxable income that is used as the bracket. So your overall taxable income determines your bracket, then that bracket gets applied. So if you have a paycheck or other income you are likely to land in the 15% bracket. Sometimes when someone is retired or doesn't have other income you can try to drag things out and get the free bracket a couple times you are most certainly not in the situation.
You do however want to make sure you avoid hitting the 20% bracket if you can, maybe spread it out over 2024/25 since we are at the end of the year
You do however want to make sure you avoid hitting the 20% bracket if you can, maybe spread it out over 2024/25 since we are at the end of the year
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I'm tempted to relay this exchange to my friend who works for Intel.
Maybe after Christmas... before seems too mean.
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Blazin
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Maybe we have a CPA who can explain it better but an example of how LT cap gains works
Let's say you made $200k at your job or other wage income and you have a $200k LT cap gain. So you have $400k in total taxable income. The first $47,025 of the LT gain is free leaving 200,000-47,025=152,975
152,975*0.15=$22,946 cap gain tax
You can do the math of breaking things up over multiple years and see that is saves a decent amount of tax
$200k ordinary inc $100k cap gain
100,000-47025=52975
52975*0.15=7946 cap gain tax
...EDIT horribly wrong calculations with ordinary income which fills the 0% bracket PRIOR to cap gains
Do that twice for $15,892 in tax instead of $22,946
152,975*0.15=$22,946 cap gain tax
You can do the math of breaking things up over multiple years and see that is saves a decent amount of tax
$200k ordinary inc $100k cap gain
100,000-47025=52975
52975*0.15=7946 cap gain tax
...EDIT horribly wrong calculations with ordinary income which fills the 0% bracket PRIOR to cap gains
Do that twice for $15,892 in tax instead of $22,946
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Palum
what Suineg set it to
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fris
Vyemm Raider
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free capital gains if you make less than $47k/ year. 200k agi and 200k captial gains would put 15% tax on all your captial gains. i think
www.irs.gov
Topic no. 409, Capital gains and losses | Internal Revenue Service
IRS Tax Topic on capital gains tax rates, and additional information on capital gains and losses.
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Blazin
Creative Title
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Look into it and let me know why you think I might be saying that
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Palum
what Suineg set it to
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free capital gains if you make less than $47k/ year. 200k agi and 200k captial gains would put 15% tax on all your captial gains. i think
Topic no. 409, Capital gains and losses | Internal Revenue Service
IRS Tax Topic on capital gains tax rates, and additional information on capital gains and losses.
Right which is what I was asking for in the example he gave.
tugofpeace
Trakanon Raider
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Isn't this true only if your LT cap gain is your only source of income? Otherwise if you have a regular job that yields between $47k - $519k of taxable income, your LT cap gain is 15% tax bracket
General Antony
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Yes, the 0% capital gains rate isn't a marginal rate on the first XX dollars, it applies only if you're below the income level. AKA its just for the nogs that don't have stocks anyway.
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Cad
scientia potentia est
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General Antony
Ahn'Qiraj Raider
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I'm not an accountant but I would imagine that if you're at retirement age SS and 401k/IRA RMDs count toward the income threshold which makes it a hell of a lot less than $47K.
And if you're younger you're very likely not living a life where cash flow of $47K can cover your expenses.
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Cad
scientia potentia est
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It's $94,050 in 2025 for married couples, and then you have standard deduction ($30k for married filing jointly) so you get $124,050 at 0% tax. Even for a single person this would be $62k you could pull out of a taxable account with $0 tax. Above that only 15% long term cap gains.
From there up to $583k it's only 15% long-term cap gains tax. So I can pull $250k a year from taxable accounts and pay $18,892 in tax, or $124,050 and pay $0. Not a bad deal at all.
Rod-138
Trakanon Raider
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Ummm yeah the tax thing is not black and white since there are other random factors that you need to plug in, but the simple version is you take it over the next 5 years because you know it’ll be a friendlier bracket than the future, potentially.
Also, there’s a good chance Trumps team changes it a bit, so based on what you believe that change could be, you may want to load up now / 2025 or wait a bit.
Also, there’s a good chance Trumps team changes it a bit, so based on what you believe that change could be, you may want to load up now / 2025 or wait a bit.
Sanrith Descartes
You have insufficient privileges to reply here.
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"but the simple version is you take it over the next 5 years because you know it’ll be a friendlier bracket than the future, potentially."
This is not necessarily true. Tax brackets were lowed in the 2017 tax bill. Those brackets revert at the end of 2025 unless Congress acts.
Tax brackets pre-2017 bill:
10%
15%
25%
28%
33%
35%
39.6%
Since 2017
10%
12%
22%
24%
32%
35%
37%
There is some pain coming if Congress doesn't address this.
I agree 100% though with "there are too many factors to just estimate". Everyone's tax return is individual specific. Each has factors someone else may not. All of those factors interact and can adjust your tax liability. Just like I don't suggest becoming a stock trader without lots of experience, I don't suggest just assuming doing your own tax return with turbotax if you are looking at hundreds of thousands in capital gains is your best bet. The couple hundred you spend in a consultation with a tax-focused CPA could save you thousands in taxes.