Capital Gain Tax and New Tax Law

[sewang]

I have a question regarding how capital gain tax works under
new tax law.

Under new law:
Capital gains are not taxed if your family earned income is below $77k.
And AMT will not kick in if your capital gain is below 1million.

So say John Doe, married, retired, with no earned income. But sold investments(stocks, mutual fund, investment property) with long term capital gain 600K in 2018.
His tax due for 2018 will be 0.

If the same scenario but in 2017, he would have to pay a lot of tax because AMT would have kicked in even though he had no earned income.

Anything wrong with this picture?

Thx in advance,

 

[kramer]

The capital gains taxes are not changed by the new tax law. In your example of married couple with long term capital gain of 600K ... he would pay 0% on first 77K, 15% from 77K to 479K and 20% from 479K to 600K. Also, they would pay the 3.8% investment income surcharge on everything over 250K.

 

[LOL!]

Another thing wrong with the OP is the statement about earned income below $77K.
Wrong:

Capital gains are not taxed if your family earned income is below $77k.

Capital gains are not taxed if your MFJ taxable income is below $77.2k (check the exact number).

Taxable income is not earned income. It is derived from Adjusted Gross Income after subtracting Deductions which can be substantial. See Form 1040.

This may also be helpful: https://www.fool.com/taxes/2017/12/22/your-guide-to-capital-gains-taxes-in-2018.aspx

 

[audreyh1]

AMT kicks in at ~$109,000 for MFJ but it depends on various factors whether you’ll owe any extra due to it. $1M is where the AMT exemption phases out.

 

[pb4uski]

.... Anything wrong with this picture?

Yes. Your numbers, your analysis and your attitude.

 

[frayne]

Yes. Your numbers, your analysis and your attitude.

Just spewed my coffee all over the keyboard !

 

[VanWinkle]

Yes. Your numbers, your analysis and your attitude.

I must have missed the "attitude" as it appeared to be a straight forward question.

 

[pb4uski]

Wake up!

 

[sewang]

The capital gains taxes are not changed by the new tax law. In your example of married couple with long term capital gain of 600K ... he would pay 0% on first 77K, 15% from 77K to 479K and 20% from 479K to 600K. Also, they would pay the 3.8% investment income surcharge on everything over 250K.

Thanks a lot. This makes a lot of sense

 

[MichaelB]

Yes. Your numbers, your analysis and your attitude.

Looks like you put a little too much grouch powder on your cereal this morning. A bit more sugar wouldn’t hurt ..

 

[FireBug]

your attitude.

?? !!

Where was an attitude displayed? Chill.

OP...as one of the less learned members of this board, I gain far more from general questions like yours than I do from the more ******* types.