basic capital gains tax question

[davidbeitz]

i have a very basic federal tax question concerning capital gains. if i generate $10,000 in cap gains in 2020, how will it be taxed? Assume held for more than one year, $80,000 W-2 income, married filing joint, no other income and disregarding state taxes.

In the case above my AGI will be $90,000, my taxable income will be $65,200 ($90,000-$24,800) so i owe no long term capital gains tax and the $10,000 will not be taxed as regular income, correct?

Thanks in advance

 

[RunningBum]

Right.

 

[SecondCor521]

On your federal return.

You might owe state income taxes. My state taxes capital gains as income, and I'm fairly sure it's not the only one.

 

[NW-Bound]

For the years immediately after I stopped having earned income, I sold and immediately bought back my stock shares in order to book capital gains that I did not have to pay Fed tax on. I went up to the tax bracket limit for no tax on cap gains.

The same shares were then tax-free for subsequent withdrawals for spending. Nice!

That money has been mostly spent, and I am now back to paying taxes on IRA/401k withdrawal. Bummer!

 

[HI Bill]

For the years immediately after I stopped having earned income, I sold and immediately bought back my stock shares in order to book capital gains that I did not have to pay Fed tax on. I went up to the tax bracket limit for no tax on cap gains.

The same shares were then tax-free for subsequent withdrawals for spending. Nice!

That money has been mostly spent, and I am now back to paying taxes on IRA/401k withdrawal. Bummer!

That’s my plan, too! Will take me from 54 to 59 to accomplish, unless there’s a big downtown.

 

[rothlev]

You will not pay federal taxes on Long term capital gains at that income level. You will stay under the threshold.

 

[JoeWras]

The tax treatment of this and qualified dividends surprised me now that I have no wage. I just wasn't paying attention.

On doing a pro forma try at our taxes this year, I was happily shocked at the low amount of fed tax. Not happy about state tax though.

 

[pb4uski]

i have a very basic federal tax question concerning capital gains. if i generate $10,000 in cap gains in 2020, how will it be taxed? Assume held for more than one year, $80,000 W-2 income, married filing joint, no other income and disregarding state taxes.

In the case above my AGI will be $90,000, my taxable income will be $65,200 ($90,000-$24,800) so i owe no long term capital gains tax and the $10,000 will not be taxed as regular income, correct?

Thanks in advance

Will not be taxed as ordinary income.... since your taxable income is under $80k the $10k of capital gains will be in the 0% preferenced income bracket... a long way of saying it is tax-free... congratulations!

 

[Fermion]

It will still count toward your ACA MAGI though if you use subsidies.