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Capital Gains Tax Rules

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  • Avatar Golfer68 
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    If you are retired and have an income of $30,000 from a pension and have not started to draw off 401k or SS, if you sell $500,000 dollars worth of stock from a taxable account, $50,000 of which is long term capital gains, what capital gains tax bracket are you in? 30,000 (0%)? 80,000(15%)? 530,000(20%)?

    #197474 Reply
    Avatar Peds 
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    Status: Physician
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    Joined: 01/08/2016

    part will be zero, the rest 15%.

    your basis does not affect your income.

    #197478 Reply
    Liked by ENT Doc
    Dreamgiver Dreamgiver 
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    Joined: 03/09/2017

    What peds wrote. The 50k growth in the taxable will be taxed mostly as LTCG, STCG for the portion of recent reinvestments (if you did that)

    #197479 Reply
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    Avatar Golfer68 
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    Thank you! so essentially capital gains counts as income as far as what tax bracket you end up in?

    #197499 Reply
    q-school q-school 
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    Joined: 05/07/2017

    Thank you! so essentially capital gains counts as income as far as what tax bracket you end up in?

    Click to expand…

    right.  they are not taxed at the ordinary income marginal rate but they do determine what tax bracket your earned income falls into.

    i think that’s your question.

    #197511 Reply
    Liked by Golfer68, Peds
    ENT Doc ENT Doc 
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    Most will be at 0% because of the standard deduction. Did you have no dividends?

    #197512 Reply
    ENT Doc ENT Doc 
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    I would phrase it differently. The pension was the mandatory payment. The decision on the margin was to sell stock. Therefore it’s the pension that is determining the tax rate of the capital gains in this situation. Whether $0 or $50k in CG is made on sale that pension (minus standard deduction) is still getting taxed at the same rate (10%).

    For the OP, see the Qualified Dividend and Cap Gains Tax Worksheet in the 1040 instructions. You’ll see how it all relates.

    #197517 Reply
    Avatar Golfer68 
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    Status: Physician
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    it is, thank you!

    #197523 Reply

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