But I don’t think I will do that now.
I have a lot of capital gains ( or I did, I think much of it disappeared this month
), and if my income as a single person is below 40K, I can sell off those investments and owe 0 capital gains tax. If I make $40,001 or more I’d owe 15%.
I also might be ahead if I convert my IRAs to Roth at a time I am keeping my income low.
In your scenario, you'd only owe taxes on $1, 15 cents, not the entire $40k
And if you die early, you'll be able to help Uncle Sam..............
I’m talking about the capital gains. If a single person earns under 40,000 and sells appreciated assets their capital gains tax rate on the sales is 0. Over $40,000 income it’s 15% though at some point maybe $250,000 it is even higher. That doesn’t mean their income tax is 0, it means their taxes on capital gains is 0.
Ordinary income tax rates and capital gains tax rates are two different things. From what I can tell I could have $1M in capital gains from selling stocks and if I had under $40,000 in income, be it from working, dividends, 401K distributions, social security etc, I’d owe no capital capital gains, at least to the IRS. States taxes on it might vary.
Under $40,000 income is the magic number for those under 65 getting cheap Obama care insurance too I believe.
Don't think that's correct
Current tax law does not allow you to take a capital gains tax break based on age. Once, the IRS allowed people over the age of 55 a tax exemption for home sales. However, this exclusion was closed in 1997
Unlike ordinary income, which is money that you earn through work or by selling the product of your work, capital gains are subject to their own set of taxes. (Ordinary income is taxed at income tax rates.) In 2022, capital gains are taxed at the following brackets:
0%: $0 – $40,000 Single / $0 – $80,000 Married
15%: $40,401 – $445,850 Single / $80,801 – $501,600 Married
20%: $445,851+ Single / $501,601+ Married
https://smartasset.com/taxes/capital-gains-exemption-for-seniors
