NEW! - Can Capital Gains Push Me Into a Higher Tax Bracket?

Long term capital gains get special treatment in the tax code. However, this special treatment tends to generate questions such as, will capital gains push me into a higher tax bracket? Or, what happens if my capital gain goes over the 0% rate threshold? This is a relatively technical subject that requires some foundational knowledge. We tackle it in this video with a few examples of how the ordering rules dictate the tax rate(s) when a taxpayer has multiple types of income.
Source for tax rates: www.irs.gov/filing/federal-in...
👉 My professional focus is retirement planning for individuals age 55+. Please visit my website or reach out for a complimentary planning session. Thanks for watching! 😀
Ted Erhart, CFP®
Financial Planner
Anoka, Minnesota
www.norrislakeretirement.com
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Norris Lake Financial Planning is a SEC registered investment advisor able to conduct advisory business in states where it is registered, exempt or excluded from registration. All contents contained herein should not be construed as an offer or solicitation for investment advice or for the offer or sale of any security, insurance or other investment product. Data contained here is obtained from believed reliable sources, however, cannot be guaranteed. Investments contain a risk of loss. Please consult a qualified legal, tax or accounting professional before implementing any investment or strategy discussed.

[@RBart-os6sy]

The best explanation I found on YT. Thanks! I just subscribed.

[@williamthone9678]

Really clear!

[@tomn5413]

Awesome video ... short and sweet. I am looking forward to see more video relate to Capital gains and IRMMA tax. Thanks

[@boatsie]

I watched LOTS of videos about this subject and always came away feeling I was missing something. This was the first video that cleared up a lot of my questions & concerns about this subject. Thank you so much for your time & effort…I now understand 👍
Qualified dividends also fall into that ”Capitol Gains” bracket bucket as well…right?

[@kansaidan2302]

You're a great teacher! I will be subject to Capital Gains soon and it's good to know exactly how they work. Will help me to calculate how much I can SELL. I'm also a retiree, so I need to keep Social Security and IRMAA in mind. At least if I seek out a TAX professional I'll be somewhat informed. Thank you!

[@TedErhartCFP]

Glad it was helpful!

[@andrehorochiwsky3627]

I thought I understood income, standard deduction, LT capital gains calculations well.
I was close, but missed a few key points.
Thanks, very helpful.

[@mhub3576]

You're right it is technical, but you did a great job simplifying it. Top notch presentation, Ted!

[@TedErhartCFP]

I appreciate that!

[@kerripace]

Nice job! Thank you!

[@keithmachado-pp6fv]

One item that caught me off guard this year. I always take the $3k cap loss against ordinary income but this year I have some unexpected cap gains and now the $3k loss will go against my cap gains in the zero percent bracket, effectively making $3k more of my overall income taxable than had it offset ordinary income.

[@ReesRetuta]

great video! super useful illustrations

[@keithmachado-pp6fv]

The opposite happens when more ordinary income can add more tax to cap gains. For example if you are at the top of the 12% bracket and get another $100, you will pay 22% on that income and another 15% on $100 of capital gain that would have otherwise not been taxed, effectively going from 12% to 37%.

[@sarahthomas2303]

Where did he the computation for 16950$ and 33050$. Please help

[@bobyrd74]

Great stuff here, I searched on google for this exact thing, that was useless, on YT your video was first!! For these examples, if instead of ordinary income, instead there was IRA distributions along with the LTCG, does anything change?

[@TotalReturns]

IRA distributions as well as Roth conversions are part of your ordinary income bucket.

[@gchow6009]

Here’s a case for you : married file joint with a dependent under 18. One spouse is 60 and the other 51. Their itemized deductions is 35k. Also continue to contribute to the younger spouse IRA. Main source of income will be long term capital gain. The plan is to live off from capital gain no other income and convert some of the older spouse’s IRA to Roth. They don’t plan to file SS until 68 or 70. How much should they convert IRA to Roth each year approximately to maximize the zero tax bracket of capital gain? Is 40K-50K conversion a year a good number? Thank you for your expertise and thank you for this video. It’s helpful.

[@TedErhartCFP]

Speaking hypothetically, if this were my situation, I would want to convert an amount rough equal to my deductions. Then I'd pay no federal income tax on either the conversion or the capital gain.

[@gchow6009]

@@TedErhartCFP Thank you for your quick response. You have confirmed the plan I am thinking.