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Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: aneel on October 19, 2018, 07:55:22 AM

Title: Sell for loss or harvest gains?
Post by: aneel on October 19, 2018, 07:55:22 AM
I need to pull a little bit of money out of stocks - with pretty poor timing as I'll need to do it by the end of this month.  I'm likely going to be in 0% LTCG bracket.  the only reason I wouldn't be in that bracket would be if my annual bonus is too high.

I have a few options in my taxable account:

I can sell some stock resulting in $1,164 in LTCG, or I can sell some bonds for $210 in LT loss.  No real risk of wash sale as I put a lump into bonds a while back and haven't added any since.

I risk paying taxes on the LTCG if I tip over the bracket.  The consequences/benefits of either choice are pretty small, but curious to hear what you would do.

Thanks!

Title: Re: Sell for loss or harvest gains?
Post by: tomorrowsomewherenew on October 19, 2018, 02:09:34 PM
Usually, at the end of December (20th or later, after all dividends have been paid out) I calculate how much LTCG I can take and still be in the 0% tax bracket. Last year I had a lot of space--over $10k.

Our overall effective tax rate is 0% on Federal and 0% on state. If it were me, I'd take the tax free gains. You can't control what taxes will look like in 3 or 5 years, but if you take gains now, you're definitely getting SOME benefit.
Title: Re: Sell for loss or harvest gains?
Post by: Catbert on October 19, 2018, 02:35:24 PM
Usually, at the end of December (20th or later, after all dividends have been paid out) I calculate how much LTCG I can take and still be in the 0% tax bracket. Last year I had a lot of space--over $10k.

Our overall effective tax rate is 0% on Federal and 0% on state. If it were me, I'd take the tax free gains. You can't control what taxes will look like in 3 or 5 years, but if you take gains now, you're definitely getting SOME benefit.

+1   Remember that 0% cap gains extends up to 77K if you are MFJ although only 38K if you're single.

https://www.fool.com/taxes/2017/12/11/long-term-capital-gains-tax-rates-in-2018.aspx

Title: Re: Sell for loss or harvest gains?
Post by: aneel on October 25, 2018, 05:14:22 PM
Thank you for the encouragement. I took the gains and hopefully they'll be tax free. The only reason they wouldn't be is if I get a mega bonus. Win win!