Disappointed
Recycles dryer sheets
- Joined
- Sep 16, 2007
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Anybody plan and manage withdrawals to avoid hitting the AMT limits?
I don't have any choice. 90% of my assets are taxable, and what they throw off in distributions and interest, and what I realize as capital gains in a given year determines whether we are subject to AMT.Anybody plan and manage withdrawals to avoid hitting the AMT limits?
I don't have any choice. 90% of my assets are taxable, and what they throw off in distributions and interest, and what I realize as capital gains in a given year determines whether we are subject to AMT.
We only seem to avoid it after market drops when distributions drop.
Using funds which generate low distributions, and municipal bond funds which are AMT free are good strategies for avoiding AMT.Does a different strategy with a face value of lower returns maybe actually net out to more advantageous net return than your current allocation given your AMT issues? For example, switching from whatever you're holding now to a long term index fund strategy plus municipal bonds which aren't taxable.
Using funds which generate low distributions, and municipal bond funds which are AMT free are good strategies for avoiding AMT.
But to switch to such investments incurs high capital gains, which will generate sizable AMT in the year you make those sales. Best to take this kind of step when you can harvest losses - i.e. after a bear market occurs.
Supposedly as part of rebalancing - a rather gradual approach. To switch strategies in taxable accounts it is usually best to wait for years where you can tax lost harvest.You're right. What do you do with the gains from your current strategy, though? If you're re-deploying them in the same allocation, can you start funneling them into the new strategy and eke out some benefit over time?
How does the AMT handle capital gains? Does it just treat them as ordinary income subject to 26% and/or 28%?
No! Thank God!
Capital gains are treated exactly the same way under both the regular tax, and AMT. 0% until total income (AGI) reaches the top of the 15% tax bracket, 15% until total income reaches the top of the 36% tax bracket, and 20% for amounts above that.
In other words - only ordinary income is subject to the AMT.
Don't worry - I know how to compute the taxes on my capital gains. But the above are not AMT specific issues.audrey.....might want to check your marginal tax rate on CGs before you get too excited. In the exemption phaseout region, large CGs reduce the exemption and can result in marginal rates of about 26% (including NIIT). While technically the reduction of the exemption results in increased tax on the ordinary income, this effect was due to the CGs which you can see if you check the marginal rate.
Let's not ruin the thread by speculating on taxes.
How does the AMT handle capital gains? Does it just treat them as ordinary income subject to 26% and/or 28%?