FIRE’d and have a question about capital gains

[SenoritaStache]

Hello fellow mustachians!


I have a question about capital gains when selling a stock, I’m currently FIRE’d and never had to access any of our assets over at Vanguard, because my fiancé is still working so we live off of his income for the moment.  Since we haven’t touched our stach, I’m actually starting to think how bad it’s going to be once we do have to access it.  Most of the gains are over a year old, some are “younger” only a few months ago, (dip in Facebook) and put a tiny bit in.  So my question is this, “IF” I were to sell the not one year old ones, now, how much should I calculate from taxes?  I am personally in the lowest bracket because I don’t work, all I get is dividends, and my fiancé since we are not married yet files his own personal taxes with his income.  The dividends I get are probably around 5k per year. 

Also I would like to know how much I could draw out of the long term ones, without having to pay taxes or paying as little as possible?  I apologize for the dumb questions but I need to know before I F*** things up, Lol

I’m reading as much as I can from GCC to see if I can figure it out on my own, I kinda have a general idea but I need reassurance!  Thanks

[MustacheAndaHalf]

You get a $12k standard deduction, which wipes out income or dividends.  Besides that, up to the $38k level your dividends and long-term capital gains are taxed at 0%.
https://www.nerdwallet.com/blog/taxes/capital-gains-tax-rates/

You should strive to use up as much 0% tax space as you can, in my opinion.  You could even use round numbers if this is new and you're afraid of hitting limits:

Sell short-term assets, $10,000 worth of short-term gains, taxed at 0% (standard deduction)
Next $5,000 of dividends, also taxed at 0% (using up $5k of $38k)
Sell long-term assets, $30,000 worth of long-term gains, taxed at 0% (still under $38k)

You can also test this out with tax software.  Enter $30,000 for qualified gains in the tax software and see if the result is $0 tax.

[SenoritaStache]

Any recommendations on what tax software I could try it on?

[MustacheAndaHalf]

If you file taxes online, then maybe you don't have one.  But if you have an old tax software program lying around, create a new return within it and you can verify the general idea.

There's an IRS tax form called "Qualified Dividends and Capital Gain Tax Worksheet—Line 44" that also illustrates the point.  Quoting line #11:
"11. Subtract line 10 from line 9. This amount is taxed at 0%."
https://apps.irs.gov/app/vita/content/globalmedia/capital_gain_tax_worksheet_1040i.pdf

Maybe that helps authenticate it as well.

[SenoritaStache]

Thank you for your valuable information, I really appreciate it!

[MDM]

Any recommendations on what tax software I could try it on?

Because 2018 tax law differs so much from 2017 tax law, consider the "what if?" worksheets of TurboTax, TaxAct, etc., the case study spreadsheet, or 1040 (Excel Spreadsheet).