Vanguard Wellesley and Capital Gains Taxes questions

[bizlady]

Quote:

Originally Posted by audreyh1 Right - the total income limit for 0% taxable LT cap gains is $77,400 + $24,000 standard deduction = $101,400 for MFJ.

I think the LT cap gains is actually 77200 + 24000 = 101200 for 2018. Quirk in the new law. I may be wrong but you might wan to double check this

[audreyh1]

Quote:

Originally Posted by bizlady I think the LT cap gains is actually 77200 + 24000 = 101200 for 2018. Quirk in the new law. I may be wrong but you might wan to double check this

I also thought it was $77,200, but then double checked and some site that I thought I had referenced before gave me the $77,400 number. Annoying!

Yes, I really think the $77,200 number is correct.

[audreyh1]

Quote:

Originally Posted by Earl E Retyre Thanks all, for the excellent explanations. I am glad you were persistent and cleared up my confusion. So, it looks like I should do what PB4 suggests and wait until late December, then likely sell all of Wellesley and realize the gain... that should put me at $59k for AGI/MAGI... which is under the $64k limit for ACA. And should result in a 0% tax cost on the gain resulting from the sale. I will then buy VTI in my taxable account with the proceeds of the Wellesley sale so that next year I am more in control of capital gains. And so I minimize the amount that will hit my AGI/MAGI next year when it will be tight for me to meet ACA requirements. I can buy bonds or CDs in my tax efficient account to maintain the same AA.

Your unrealized capital gain is changing every day, and reduces as the market sells off. It increases as the market rallies.

[pb4uski]

If when you get your numbers refined you can't fit it all in 2018 then you can do as much as you can in 2018 and the remainder in 2019.

And the TI limit for 0% capital gains for MFJ for 2018 is $72,200, not the $74,400 top of the 12% tax bracket.

If you are pretty sure of your numbers you might take advantage of a dip to do the flip from Wellesley to VTI... your gain will be lower but it'll give you more room for estimating error without going over the $64k cliff.

[DAYDREAMER]

Wellesley's large distribution this year has complicated people's financial plans. I'm re-evaluating if Wellesley is the correct fund to own in my taxable account. The other thing to consider is that only 33% of the dividends are qualified Dividends, and 66% of the dividends are taxed at ordinary income rate.

[audreyh1]

Vanguard has listed only estimated cap gains distributions so far. There will also be dividends. So expect additional income - dividend estimates are published early Dec?

[VanWinkle]

Quote:

Originally Posted by donheff How about selling VWIAX and buying something like VTSAX in taxable and exchanging enough equities for bonds in a 401K to make up the difference in your AA.

+1 on this, Wellesley is a no no for a taxable account if you are
trying to control income for the ACA.

I own some Wellesley in my IRA, but would never hold it in taxable.