How to take advantage of a no-income year (taxwise) when you could sell stock with capital gains?
I didnīt have much income this year, so I was thinking of selling any stock with capital gains. The purpose of this sell is to take advantage of the standard deduction and the 0% tax on capital gains income less than ,600.
Is my approach correct? Any other suggestions or things I should consider?
Thanks,
P.S. The total stock gains I should aim to is ,000 + ,600. Correct?
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As of 2018, capital gains rates are no longer tied directly to income tax brackets. The following includes the tax income and LT cap gain rates for individuals:
Income Income Tax STCG LTCG
[CO] to ,525 10% 10% 0%
,526 to ,600 12% 12% 0%
,601 to ,700 12% 12% 15%
,701 to ,500 22% 22% 15%
etc.
As you can see, individuals with total income up to ,600 are in the 0% capital gains bracket, while those who earn just a bit more (,601 - ,700) are in the 15% capital gains bracket.
Short term capital gains are from assets held less than one year. They are taxed as ordinary income.
Qualified dividends are taxed at the same rate as long-term capital gains.
Here's a Capital Gains calculator:
smartasset.com/investing/capital-gains-tax-calculator#W71pjFKRdD
If you plug in numbers that add up to a ,600 LT cap gain, it shows that the tax due is zero.
Disclaimer: Consult with a qualified accountant
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