Check this out to better understand how capital gains impact the taxation of Social Security: ruclips.net/video/X2K9E4tKrfQ/видео.htmlsi=GNAWq6dQRuopPKIO
I see these examples a lot - but something no one ever clarifies: to get the $120k in capital gains, some of what they pulled out was likely also cost basis, correct? So someone may pull out $200k from their taxable account, of which $120k is capital gain, and $80k is cost basis. Since that cost basis was already taxed, this does not get reported on your tax return, only the capital gain. So they didn't just get $10k per month, but $16.6k per month. Is this correct or am I missing something?
This is a great comment. In short you are correct. I'm thinking about doing a part II on this subject to clarify this very point. Someone could easily create a tax free income stream of $12, 15 or even 20k per month depending on how much basis vs. capital gains they have.
Yes, and it makes sense to max out the 0% tax bracket to do tax gain harvesting even if you don’t need all that income - then turn around and reinvest the surplus back into the stock. (The wash sale rule doesn’t apply to tax gain harvesting, only tax loss harvesting.)
When annuities and RMD considered, the Long Term Capital Gains tax benefit quickly diminishes. If people don't have stocks, how to create long term capital gains if only IRA/Roth IRA accounts are available?
Check this out to better understand how capital gains impact the taxation of Social Security: ruclips.net/video/X2K9E4tKrfQ/видео.htmlsi=GNAWq6dQRuopPKIO
Very comprehensive, thanks! I appreciate you included the “single” numbers in the grids, too.
Can you show how a short-term capital gains works?
I see these examples a lot - but something no one ever clarifies: to get the $120k in capital gains, some of what they pulled out was likely also cost basis, correct? So someone may pull out $200k from their taxable account, of which $120k is capital gain, and $80k is cost basis. Since that cost basis was already taxed, this does not get reported on your tax return, only the capital gain. So they didn't just get $10k per month, but $16.6k per month. Is this correct or am I missing something?
This is a great comment. In short you are correct. I'm thinking about doing a part II on this subject to clarify this very point. Someone could easily create a tax free income stream of $12, 15 or even 20k per month depending on how much basis vs. capital gains they have.
Yes, and it makes sense to max out the 0% tax bracket to do tax gain harvesting even if you don’t need all that income - then turn around and reinvest the surplus back into the stock. (The wash sale rule doesn’t apply to tax gain harvesting, only tax loss harvesting.)
When annuities and RMD considered, the Long Term Capital Gains tax benefit quickly diminishes. If people don't have stocks, how to create long term capital gains if only IRA/Roth IRA accounts are available?
Correct, this approach is for people with taxable/non-qualified accounts. You're in better shape if you have Roth, but out of luck with pre-tax IRAs.
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