What is my capital gains tax rate?

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BogleMe
Posts: 268
Joined: Sat Mar 13, 2010 7:10 pm

What is my capital gains tax rate?

Post by BogleMe »

Help me make sure I am focused on the right number here. Below is my estimate of 2014 1040.

MFJ
Wages: $84,000
Dividends: $10,500
Cap Gains: $5,000
Refunds: $500
AGI = $100,000

Itemized Deductions: ($17,000)
Exemptions: ($15,800).

Taxable Income: $67,200.

For MFJ in 2014 there is a 0% CG rate on income up to $73,800. I suppose, assuming the above holds true, my $5,000 in CG thus far will be tax free - and I'd have $6,600 in wiggle room?
Novine
Posts: 1240
Joined: Mon Nov 17, 2008 8:07 pm

Re: What is my capital gains tax rate?

Post by Novine »

We would need to know the nature of the dividends. How much, if any, are qualified dividends? That makes a difference on how they are taxed. Read more here.
jmg229
Posts: 373
Joined: Mon Jan 31, 2011 12:21 pm

Re: What is my capital gains tax rate?

Post by jmg229 »

Also, don't forget state tax on capital gains, if applicable.
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Peter Foley
Posts: 5533
Joined: Fri Nov 23, 2007 9:34 am
Location: Lake Wobegon

Re: What is my capital gains tax rate?

Post by Peter Foley »

Because there are different tax rates on various sources of income, I array my income numbers differently to figure out where I am at. (Notice we get to the same result.)

Using your example:
Wages $84,000
Interest* 0 *(and non qualified dividends)
Short term CG 0
Refund $ 500 (if taxable)
Subtotal $84,500
Itemized (17,000)
Exemptions (15,800)
Taxable Inc. $51,700

Q Dividends 10,500
LTCG 5,000

Subtotal $67,200
Additional 15% space = 73,800 - 67,200 [6,600]
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Toons
Posts: 14467
Joined: Fri Nov 21, 2008 9:20 am
Location: Hills of Tennessee

Re: What is my capital gains tax rate?

Post by Toons »

BogleMe wrote:Help me make sure I am focused on the right number here. Below is my estimate of 2014 1040.

MFJ
Wages: $84,000
Dividends: $10,500
Cap Gains: $5,000
Refunds: $500
AGI = $100,000

Itemized Deductions: ($17,000)
Exemptions: ($15,800).

Taxable Income: $67,200.

For MFJ in 2014 there is a 0% CG rate on income up to $73,800. I suppose, assuming the above holds true, my $5,000 in CG thus far will be tax free - and I'd have $6,600 in wiggle room?
Thats the way I view it with your taxable income @67,200 you pay 0 on the long term gains,and yes you have wiggle room
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
john94549
Posts: 4638
Joined: Tue Jul 26, 2011 8:50 pm

Re: What is my capital gains tax rate?

Post by john94549 »

Just a thought. Given the amount of your dividends, I'm "guesstimating" a taxable equity portfolio well into the six figures. Have you given any thought to harvesting some gains while you have room? Time's runnin' out, as they say.
Topic Author
BogleMe
Posts: 268
Joined: Sat Mar 13, 2010 7:10 pm

Re: What is my capital gains tax rate?

Post by BogleMe »

John , yes very low 7 digits...another $1,500 of divs have trickled in as well. Yesterday, I actually harvested a $2,000 gain in an old active fund position to take advantage of the room. Looking back over the year, I harvested EWX and didn't really need to :(

Thank y'all for your help.
Novine
Posts: 1240
Joined: Mon Nov 17, 2008 8:07 pm

Re: What is my capital gains tax rate?

Post by Novine »

I can see from some other responses that I may have been looking at this the wrong way. Does the income from Capital Gains and Qualified Dividends fill the lower tax brackets for the purpose of calculating the taxable income even though they are taxed at a zero percent rate?
kaneohe
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Joined: Mon Sep 22, 2008 12:38 pm

Re: What is my capital gains tax rate?

Post by kaneohe »

Novine wrote:I can see from some other responses that I may have been looking at this the wrong way. Does the income from Capital Gains and Qualified Dividends fill the lower tax brackets for the purpose of calculating the taxable income even though they are taxed at a zero percent rate?
They sit on top of the ordinary income so that deductions/exemptions come first from ordinary income, then ordinary income is taxed at the lower rates.
LTCG/QDIV are taxed according to which bracket they sit in......in the 15% or lower brackets, they are taxed at 0%. In higher brackets, 15% or more.
Google for "stacked bar charts".
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