Capital Gains Harvesting

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mikeski569
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Capital Gains Harvesting

Post by mikeski569 » Thu Dec 24, 2015 3:42 am

I'm trying to figure out how much Capital Gains I can harvest without bumping myself up into the next tax bracket.

I am expecting to make about $33,000 this year. which puts me in the 0% capital gains tax rate.
I also plan to open up an HSA account and max that out this year. $3350
I also put about $5000 dollars into my 401k

Am I correct in assuming that my AGI (after above is done) will be 33,000 - 3350 - = roughly 24,650?

Thus i should be able to harvest roughly 37,451 - 24,650 = 12,801 in capital gains tax free?

Am I missing anything here?

livesoft
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Re: Capital Gains Harvesting

Post by livesoft » Thu Dec 24, 2015 3:47 am

Taxes are determined based on your taxable income and not your AGI.

Use a tax program to figure this out. Taxcaster is a decent free online one for estimating taxes but nothing beats a full blown real bit of software.
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JoinToday
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Re: Capital Gains Harvesting

Post by JoinToday » Thu Dec 24, 2015 4:25 am

livesoft wrote:Use a tax program to figure this out.
I agree 100%. I bought TurboTax for this very reason (except I was doing Roth Conversion). Plug in different numbers from small to large, and verify your marginal tax rates, both Fed & State. In my case, once AMT started, my marginal tax rates increased by 10% -- this surprised me. THis applied to both LTCG/qualified dividends, and regular income.

Another thing to consider is that Vanguard won't let you sell a fund, and immediately buy the same fund, which is what you would like to do when you are doing the tax gain harvesting. You need to buy a different fund. I couldn't do the transaction on-line, and the Vanguard Rep said I couldn't do it. I had to buy a different fund, which is what I did.
I wish I had learned about index funds 25 years ago

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Toons
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Re: Capital Gains Harvesting

Post by Toons » Thu Dec 24, 2015 5:43 am

TaxAct will assist you.
No need to pay until you file. :happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

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N1CKV
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Re: Capital Gains Harvesting

Post by N1CKV » Thu Dec 24, 2015 8:49 am

Are you filing single and not a dependent on anyone else?
If so your calculation should also deduct the standard deduction + personal exemption = 10,300
If you are also using payroll deducted health, vision and/or dental you can deduct those premiums also.
I have met a lot of people that claim to love money, but they also seem to be the same people that are in the biggest hurry to get rid of it.

IPer
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Re: Capital Gains Harvesting

Post by IPer » Thu Dec 24, 2015 9:12 am

I purchased TurboTax already this year, however, I just ran some on taxcaster, quite a nifty piece of
software, takes a lot of things into consideration, impressed: https://turbotax.intuit.com/tax-tools/c ... taxcaster/
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LK2012
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Re: Capital Gains Harvesting

Post by LK2012 » Thu Dec 24, 2015 9:26 am

IPer wrote: ... I just ran some on taxcaster, quite a nifty piece of
software, takes a lot of things into consideration, impressed: https://turbotax.intuit.com/tax-tools/c ... taxcaster/
Another vote for free Taxcaster for a quick initial estimate.

This is what I use to estimate the amount I can Tax Gain Harvest each year. Lays everything out in a clear and simple way. You can see all your critical numbers, and you just keep plugging higher numbers into the Capital Gains slots until you get to the limit that pushes you into a higher bracket.

kaneohe
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Re: Capital Gains Harvesting

Post by kaneohe » Thu Dec 24, 2015 10:47 am

Is the 33K net of the 5K 401K contribution?

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House Blend
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Re: Capital Gains Harvesting

Post by House Blend » Thu Dec 24, 2015 11:38 am

There's usually a big difference between "I am expecting to make about $33,000 this year" and the number that appears in Box 1 of your Form W-2. One of those differences is the $5,000 401(k) contribution mentioned by Kaneohe (unless it was a Roth 401(k)).
mikeski569 wrote:Am I missing anything here?
When do you expect to NOT be in the 0% cap gains bracket?

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Boglenaut
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Re: Capital Gains Harvesting

Post by Boglenaut » Thu Dec 24, 2015 12:12 pm

mikeski569 wrote:
Am I missing anything here?
Does your state tax capital gains?

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