jimbohoward69
Recycles dryer sheets
- Joined
- Feb 25, 2007
- Messages
- 70
Long Term Capital Gains Harvesting Opinions
As I've stated in other threads, I'm single and I "retired" back in December of last year. I'm still going back and forth in my head whether to ever go back to work or not but we'll see. That said, hypothetically, if I were to not go back to work in 2020, this would be a perfect year to do some tax harvesting at a 0% LTCG rate (up to $40,000 taxable income for a single filer). I came up with the following numbers:
Ordinary Income (military pension and MM interest) - $31,479
Standard Deduction - ($12,400)
Total Taxable Income - $19,079
(I'll also receive $19,894 in a non-taxable VA pension)
STCG - ($2,425)
LTCG/Qualified Dividends - $24,512
Total CG - $22,087
Ordinary Income Tax @ 10% (up to $9,875) - $988
Ordinary Income Tax @ 12% (up to $40,125) - $1104 (of remaining $9,204 in taxable income)
0% LTCG/Qualified Dividends - $0 (on $20,921...which gets me to the $40K threshold)
15% LTCG/Qualified Dividends - $175 (on remaining $1,166)
Most of the LTCG would be from selling 400 of my 500 shares of ABT. However, I would immediately buy back the 400 shares...to not only keep my current position but raise my current cost basis as well.
So, with all that said, if I go ahead with the above scenario, I stand to pay $2,267 in total tax on $73,460 in income (taxable/non-taxable)...for an effective tax rate of 3.09%. If I exclude the VA pension in the calculation, it's still a 4.23% effective tax rate on $53,566 in income. Not too shabby IMHO.
I welcome all feedback/hole-poking regarding why this would/would not be a good road to go down. Thanks!
As I've stated in other threads, I'm single and I "retired" back in December of last year. I'm still going back and forth in my head whether to ever go back to work or not but we'll see. That said, hypothetically, if I were to not go back to work in 2020, this would be a perfect year to do some tax harvesting at a 0% LTCG rate (up to $40,000 taxable income for a single filer). I came up with the following numbers:
Ordinary Income (military pension and MM interest) - $31,479
Standard Deduction - ($12,400)
Total Taxable Income - $19,079
(I'll also receive $19,894 in a non-taxable VA pension)
STCG - ($2,425)
LTCG/Qualified Dividends - $24,512
Total CG - $22,087
Ordinary Income Tax @ 10% (up to $9,875) - $988
Ordinary Income Tax @ 12% (up to $40,125) - $1104 (of remaining $9,204 in taxable income)
0% LTCG/Qualified Dividends - $0 (on $20,921...which gets me to the $40K threshold)
15% LTCG/Qualified Dividends - $175 (on remaining $1,166)
Most of the LTCG would be from selling 400 of my 500 shares of ABT. However, I would immediately buy back the 400 shares...to not only keep my current position but raise my current cost basis as well.
So, with all that said, if I go ahead with the above scenario, I stand to pay $2,267 in total tax on $73,460 in income (taxable/non-taxable)...for an effective tax rate of 3.09%. If I exclude the VA pension in the calculation, it's still a 4.23% effective tax rate on $53,566 in income. Not too shabby IMHO.
I welcome all feedback/hole-poking regarding why this would/would not be a good road to go down. Thanks!
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