Until recently, I've been focused on tax planning (well, minimization) during recent years of high income. Last week, though, I sat down and started looking at what taxes will look like in ER for someone whose portfolio is primarily made up after-tax holdings like mine will be. I was pleasantly surprised, and maybe even a bit shocked.
Consider a married couple filing jointly with one child. This couple can accumulate as much as $90,000 in long-term capital gains and qualified dividends and, because of the standard deduction and exemptions, pay $0 federal income tax under the 2013 rules. All that remains is whatever state tax might apply.
Does that sound right to you all? It almost seems "unfair" that a family living a moderate lifestyle on investment income can essentially dial in exactly the right amount of earning each year to convert maximum gains into basis and pay no federal tax.
Moreover, if said family chooses to keep income below $78,000, the ACA credits kick in as well. (Not to get off topic, but they're really going to have to fix that sharp edge at the 400% FPL...)
I'd be curious to hear from others who have REd and are holding most of their net worth in post-tax buckets. Are you all just laughing all the way to the bank, or am I dreaming here? What other tricks do you experts have up your sleeves?
Consider a married couple filing jointly with one child. This couple can accumulate as much as $90,000 in long-term capital gains and qualified dividends and, because of the standard deduction and exemptions, pay $0 federal income tax under the 2013 rules. All that remains is whatever state tax might apply.
Does that sound right to you all? It almost seems "unfair" that a family living a moderate lifestyle on investment income can essentially dial in exactly the right amount of earning each year to convert maximum gains into basis and pay no federal tax.
Moreover, if said family chooses to keep income below $78,000, the ACA credits kick in as well. (Not to get off topic, but they're really going to have to fix that sharp edge at the 400% FPL...)
I'd be curious to hear from others who have REd and are holding most of their net worth in post-tax buckets. Are you all just laughing all the way to the bank, or am I dreaming here? What other tricks do you experts have up your sleeves?