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2018 capital gains tax strategy
04-26-2018, 01:00 PM
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#1
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Dryer sheet aficionado
Join Date: Jan 2018
Location: Sandy Springs
Posts: 35
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2018 capital gains tax strategy
Just reviewing the new 2018 tax law related to capital gains. For kicks, let's assume:
2018 Wages and Interest: $125,000
Property and State tax deduction: ($10,000)
Advised Donor Contribution: ($40,000)
Taxable wages: $75,000 MFJ
It looks like the capital gains rate is 0% for wages less than $77,200 for MFJ.
If I keep my total taxable income less than $77,200, can I sell out of my taxable investment accounts with sizable long term gains to another investment vehicle & avoid the 15% capital gains tax altogether? Is there a limit on the amount of gain allowed at 0% tax? Would appreciate comments.
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04-26-2018, 01:13 PM
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#2
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2007
Posts: 13,227
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No, you add LTCGs and QDivs to that other income (less deductions, etc), and the part that pokes over the $77,200 threshold (I didn't verify that number but it sounds right) is taxed at 15%. Look at the Qualified Dividends and Capital Gains Worksheet tax form if you use Turbo Tax. TaxCut buries that info somewhere else. There's another active thread where someone posted a picture/graph that helps demonstrate it.
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04-26-2018, 01:17 PM
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#3
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2007
Posts: 13,227
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So to give numbers as an example, assuming your $75000 taxable income otherwise, you'd have the first $2200 QDivs and LTCGs at 0%. Above that would be 15%, and I think there is still a 20% rate above a certain level, and also a 3.8% NIIT tax at some point.
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04-26-2018, 01:39 PM
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#4
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2016
Location: Colorado
Posts: 8,971
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The 20% level kicks in at $425,800, but don't forget your state may want its share too.
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04-26-2018, 02:05 PM
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#5
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Dryer sheet aficionado
Join Date: Jan 2018
Location: Sandy Springs
Posts: 35
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Got it. That makes a lot more sense now that you guys walked me through it. Should have known I hadn't discovered a big loophole!
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04-26-2018, 03:10 PM
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#6
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,361
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However, once you are retired and don't have those pesky wages included, you'll have lots of room for 0% tax LTCG.
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