https://taxfoundation.org/2022-tax-brackets/
Originally Posted by Mastershake340
Originally Posted by BDW
Originally Posted by Mastershake340
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 whiney), 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.


No such thing as tax free capitol gains on investment income. People get tricked into thinking they don't pay taxes on capitol gains under $40K but you do because it's part of your income but since it's in a 12% tax bracket you don't have to file under capital gains tax because it's under 15% and not a benefit.. Once you get over $41775 the tax bracket is 22% so you file capital gains to save 7%.

You can avoid a capitol gain on your primary home up to $250K if single or $500K if married as long as you lived there for at least 2 of the 5 previous years. You can only use this every 2 years. Or you can invest the entire amount into a new primary residence and avoid any gain.

The 2022 bracket is raised to $41,775 Look at your tax return Here's an example, wages $41,775 cap gain $15,000 total income $56,775 minus standard deduction $12950 = $43825. So yes you will pay 12% tax on any amount of gain under the $41,766 and 15% on the gain over $40K.




https://taxfoundation.org/2022-tax-brackets/


Last edited by second 70; 10/01/22 03:01 PM.