0% tax rate - Dividends and Capital Gains

[MichealKnight]

Hello all...

Married Filing Jointly....

They say, if you have upto $80,800 in taxable income - that is a 0% tax rate on dividends.

Also, if you have upto $80,800 in taxable income - that is a 0% tax rate on long term capital gains.

What my desired plan is - that my LLC that contains rental homes, will show a 'zero' profit - this will be via legal means, such as depreciation and expenses.

So if I have ....let's say, $40,400 in dividend income. AND $40,400 in long term capital gains..... that is $80,800.

Does that mean, 0% Federal tax on that whole $80,800 - since my real estate company makes no money, and the first $80,800 of divs/cap gains is free?

Thanks

[cathy63]

Quote:

Originally Posted by MichealKnight Hello all... Married Filing Jointly.... They say, if you have upto $80,800 in taxable income - that is a 0% tax rate on dividends.

0% on Qualified Dividends. Nonqualified dividends are taxed at the ordinary income tax rate.

Quote:

Also, if you have upto $80,800 in taxable income - that is a 0% tax rate on long term capital gains. What my desired plan is - that my LLC that contains rental homes, will show a 'zero' profit - this will be via legal means, such as depreciation and expenses. So if I have ....let's say, $40,400 in dividend income. AND $40,400 in long term capital gains..... that is $80,800. Does that mean, 0% Federal tax on that whole $80,800 - since my real estate company makes no money, and the first $80,800 of divs/cap gains is free? Thanks

If you have no ordinary income, then you can actually have $105,900 in LTCGs and QDivs and pay no tax because the $25,100 standard deduction is subtracted before the tax is calculated.

[Retireby45ish]

This is a great calculator that will let you run through your scenarios. But yes, that sounds correct…plus the standard deduction amt as someone pointed out above.

You can play with the qualified vs nonqualified div part On there as well


https://www.dinkytown.net/java/1040-...lculator.html#

[RetireeRobert]

Quote:

Originally Posted by MichealKnight Hello all... Married Filing Jointly.... They say, if you have upto $80,800 in taxable income - that is a 0% tax rate on dividends. Also, if you have upto $80,800 in taxable income - that is a 0% tax rate on long term capital gains. What my desired plan is - that my LLC that contains rental homes, will show a 'zero' profit - this will be via legal means, such as depreciation and expenses. So if I have ....let's say, $40,400 in dividend income. AND $40,400 in long term capital gains..... that is $80,800. Does that mean, 0% Federal tax on that whole $80,800 - since my real estate company makes no money, and the first $80,800 of divs/cap gains is free? Thanks

Yes, I believe your tax would be $-0- on the entire $80,800.

And I do not believe this is a "cliff" situation, where if you go just over the limit of $80,800, that you pay full tax rate on any LT cap gains or qualified dividends. That is, you would still benefit from $-0- tax rate on the first $80,800 of the LT cap gains and/or qualified dividends.

[MichealKnight]

For the replies and the calculator.

About 30-35% of my retirement will be from real estate - most likely rental homes, with a slight chance of a commercial leased property (Wendy's, etc). OI course, I would invest in said houses for ROI.... but also, with legal depreciation.....my real estate company would show almost zero profit.

So if my stock portfolio earns 80K in capital gains/dividends (I think it'll be around 70k - average)....then the 0% taxation is part of the plan, I feel it enhances both investments.

State is 3.1% flat- not much I can do about it -- I'll start a late 529 and if things are good - max it out each year. Overall, I'm hoping that if Federal tax is 0%, and state tax is minimal - then I'd still get the $6000 child tax credits and some ACA subsidy also. (Most of my life I'd have frowned upon myself for this....but I seem to have lost that battle so I figure, enjoy defeat best I can