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2018 capital gains tax strategy
Old 04-26-2018, 02:00 PM   #1
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2018 capital gains tax strategy

Just reviewing the new 2018 tax law related to capital gains. For kicks, let's assume:

2018 Wages and Interest: $125,000
Property and State tax deduction: ($10,000)
Advised Donor Contribution: ($40,000)
Taxable wages: $75,000 MFJ

It looks like the capital gains rate is 0% for wages less than $77,200 for MFJ.

If I keep my total taxable income less than $77,200, can I sell out of my taxable investment accounts with sizable long term gains to another investment vehicle & avoid the 15% capital gains tax altogether? Is there a limit on the amount of gain allowed at 0% tax? Would appreciate comments.
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Old 04-26-2018, 02:13 PM   #2
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No, you add LTCGs and QDivs to that other income (less deductions, etc), and the part that pokes over the $77,200 threshold (I didn't verify that number but it sounds right) is taxed at 15%. Look at the Qualified Dividends and Capital Gains Worksheet tax form if you use Turbo Tax. TaxCut buries that info somewhere else. There's another active thread where someone posted a picture/graph that helps demonstrate it.
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Old 04-26-2018, 02:17 PM   #3
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So to give numbers as an example, assuming your $75000 taxable income otherwise, you'd have the first $2200 QDivs and LTCGs at 0%. Above that would be 15%, and I think there is still a 20% rate above a certain level, and also a 3.8% NIIT tax at some point.
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Old 04-26-2018, 02:39 PM   #4
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The 20% level kicks in at $425,800, but don't forget your state may want its share too.
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Old 04-26-2018, 03:05 PM   #5
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Got it. That makes a lot more sense now that you guys walked me through it. Should have known I hadn't discovered a big loophole!
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Old 04-26-2018, 04:10 PM   #6
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However, once you are retired and don't have those pesky wages included, you'll have lots of room for 0% tax LTCG.
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