Can long term capital gains push me into a higher tax bracket?
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- เผยแพร่เมื่อ 25 ก.ค. 2024
- Long-term capital gains often bring up a lot of questions like, "Will capital gains push my ordinary income into a higher tax bracket?" Taxpayers also often wonder what happens if their capital gain is slightly higher than the 0% tax bracket threshold. Is the entire gain taxed at the higher rate or just the amount that is over the 0% bracket? We tackle those questions with illustrations in this discussion.
Link to video referenced at 0:48 • Simple strategies for ...
My professional focus is tax efficient retirement planning for individuals age 55+. Please visit our website or reach out!
Ted Erhart, CFP®
Financial Planner
Anoka, Minnesota
www.norrislakeretirement.com
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Fourth video I watched on TH-cam to try to get tangible examples and the first one that made sense!
Glad it was helpful!
Thank you so much! I was searching for this explanation everywhere. The only thing I was still a little confused and wish you had explained was how you broke down the amount of capital gain that should fall within each cap gain brackets to be taxed at 0% vs 15%. For example, in your example 3, the calculation used in arriving at $75,900 and $74,100. A formula that should work even with a taxable income that falls within a 20% bracket.
Great content! Thank you
So clear!!! Thank you.
Thank you so much for this. I had been looking for a good video on exactly this topic.
Glad it was helpful!
Thanks. This answered all my questions clearly😊
OMG. So clearly explained, even I could follow this !
This content was very informative and helpful, although not what I wanted to hear. I learned ordinary income is added to long term capital gains to determine the amount of tax liability. It is a double taxation, similar to social security provisional income calculation. All of these schemes are smoke and mirrors design to trick tax payers so the government can collect more tax revenue. I make over $200k and what to sell a rental, but with this new information, I will not sell it. The second thing I learned, one that I did not consider, was the impact on Medicare premium and AGI. The government sells the dream of property ownership and retirement investing, but don't mention taxes you will have to pay later until you retire. It is better to own nothing, stay out of debit, live within your means and only invest in ROTH IRA or ROTH 401k accounts.
The was Federal Tax?., how does California tax capital gains when you sell a rental?
Well explained. Thanks.
Glad it was helpful!
Thats some good video!!!
Best explanation I've seen .... Now, I can do some projections and calculations and scenarios. Thank You! At least I'll know somewhat what I'm talking about with my CPA.
Finally, I found a good video that explains this in simple graphs! I just could not figure out if one more dollar in AGI switched all capital gains from the 0% bracket to the 15% bracket.
Awesome. Glad it was helpful!
Best cap gain video I found--thank you
Glad it was helpful!
This was he only video that went into specifics! Everyone else just read from a blog with a generic explanation. Thanks!🤙
Glad it was helpful!
Great video, Ted.
Thanks! Glad it was helpful.
Very well explained. It would be great if you could do one on ordinary vs qualified dividends as well. My understanding is their tax treatment parallels short term vs LT capital gains.
I still don't understand how the actual marginal capital gains Values were calculated
Thank you. I appreciate the clear explanation, easy to understand illustrations, and the clarification of the typo (15% supposed to be 0%).
Glad it was helpful!
Excellent video. Thanks so much for making this. It explains SO much since we will be in this scenario if we sell a property in 2024.
Glad it was helpful!
good explained
Glad it helped
I understand what you’re explaining about the long term capital gains being taxed at 0 % if less than approximately $88,000. Married Filing jointly, BUT when I look at the Schedule D, they add the short term gains and long term gains together, then want you to put the sum together on the 1040 line 16, which just adds it to the adjusted gross income to be taxed at the going rate. Where’s the form that shows 0%, 15%, and 20%?
I believe those percentages are worked out on the Qualified Dividends and Capital Gain Tax Worksheet. This worksheet is found in the instruction booklet for the Form 1040 itself, not the instructions for Schedule D. Schedule D's instructions do come with a similar worksheet, however you would apparently only use that if there were amounts greater than 0 on either lines 18 or 19 on Schedule D.
Can I reduce my ordinary income for this move using HSA contribution in addition to the standard deduction? Thank you great video
Interesting I did not know the capital gain and w2 are combined in the bracket I thought it was separate very weird but interesting
Can you make one with short capital gain
Is the LTCG calculated and taxed as a “gross” amount, or do you use the cost basis of just the gain? Thank you
Thanks for explaining everything so well here.
Can you please make a video of how Medicare insurance premium is calculated based on Earned income and Un-Earned income(long term capital Gains) in a given year?
Do they care whether you have income from long term/short term Capital Gains or Dividends?
Do they view the two differently?
Example:
Earned ordinary income is 20,000
Long term Capital gains/Qualified Dividends is 30,000
Therefore, total income is $50,000
Is the medical premium determined based on the above amount?
Thanks for the comment. Medicare Part B premiums are based off modified adjusted gross income so ALL INCOME is going to count in the calculation as it relates to any Income Related Monthly Adjustment Amounts (IRMAA). The current thresholds for Part B can be found here: www.medicare.gov/your-medicare-costs/part-b-costs.
Great video! Does tax software automatic calculate this?
Yes. Absolutely.
Thank you for the video. It was very helpful, and cleared many things up. I'm curious if it would be correct to conclude that the opposite is true. Instead of long-term capital gains threatening to push your ordinary income into a higher bracket, does your regular income actually have the power to push your long-term capital gains income into a higher capital gains bracket? Thus, for planning purposes, maybe consider not picking up too many extra hours at your regular job, if you anticipate realizing a long-term capital gain in a given year. This would keep your total taxable income lower, and thus keep more, if not all, of you capital gains income inside the lowest (0%) bracket. What are your thoughts?
Yes. Absolutely. One of my clients retired and has been selling off stock at 0%. He's considering part time work. I had to explain to him that any working income will start to push his capital gains from the 0% bracket into the 15%.
On line 16, Part III of Schedule D, it says to combine line 7 (short term) and 16(long term). But if your long term is being taxed at 0%, 15%, or 20% (different than short term), then why are they combined together and entered on line 7 of the 1040 to be taxed at a regular rate? Is there another form or method of entering the long term capital gains?
In other words, where is the IRS form that shows 0%, 15%, or 20% for Long Term Capital Gains?
Sorry for the late response here, but the actual capital gains tax is caluclated on a separate form called, "Qualified Dividends and Capital Gain Tax Worksheet."
Hi, I am wondering the exact same question except towards short term stock capital gains.. (I have less than 40K w2 {12%}) but 100k short term gains. Will I be able to tax those short term gains at 12% aswell or will it bring me up to 140K (24%)
Thank you in advance as I greatly need to know this answer
Short-term gains are taxed at ordinary income rates so an individual filer, in the scenario you're describing, would be paying a blended rate most likely across the 12, 22 and 24% brackets.
@@TedErhartCFP Thank you sir you are great!
Here is a brain teaser for you. True or False. Is there an income level where generating additional income as long term capital gains will cause more tax than the same amount of additional income from short term capital gains or ordinary income.
So many mistakes with numbers.. How did you come up with 75900 ? 80000 - 4900 ? Please use a calculator before jumping on youtube.
Looks like it calculated as: total capital gain - 15% of total capital gain = 150000 - 74100 = 75900. 74100 comes from 154900 - 80800