I'm giving FIRE a try this year. I consider it an experiment, as I'm not sure it'll work. One of the biggest question marks I have regarding FIRE is taxes. I've always outsourced my tax preparation. As a result, I'm not as close to the calculations as I could be. One of the biggest question marks I have had regarding post-FIRE taxes is the tax owed on qualified dividends and capital gains should they cause me to exceed the 0% capital gains maximum taxable income threshold.
I've feared that, should I realize just a few too many dollars of profit when selling stock holdings for a gain, I'd blow past the threshold ($38,600 for single filers, I believe), which would then cause
all of my qualified dividends and long-term capital gains to be taxed at %15, rather than 0%. However, thanks to MDM's
Case Study Spreadsheet (and the annotated "Qualified Dividend and Capital Gain Worksheet" calculations contain therein), I'm now of the understanding that qualified dividends and long-term capital gains are taxed marginally, not absolutely. Meaning, only the
portion of the qualified dividends and long-term capital gains income that exceeds the 0% threshold is taxed, not all of it. Is this correct?
I found the following discussions to reinforce this conclusion:
I'd appreciate everyone's input. Thanks in advance.
Mike....