I always thought that long term capital gains taxes are 0 as long as you stay in or under the 15% tax bracket. And (unlike ordinary income), once you cross over the 25% tax bracket -- ALL your capital gains taxes are taxed at the 15% rate, not just the amount that pushes you over into that bracket. Is that true?
My plan for 2014 was to keep my capital gains under $33,000 dollars so I would pay *no* taxes. I thought that if I accidentally went over that amount, then the entire amount would be taxed at the 15% cap. gains rate. Who is right?
My understanding is you don't have to pay quarterly, but you'll face penalties at the end of the year if you owe too much.
My understanding is you don't have to pay quarterly, but you'll face penalties at the end of the year if you owe too much.
Does this mean that if you stay in the 15% tax bracket and only cash out and live off mutual funds (long term cap gains taxed at 0%), does that mean your taxes due at the end of the year will be *zero*?
My understanding is you don't have to pay quarterly, but you'll face penalties at the end of the year if you owe too much.
Does this mean that if you stay in the 15% tax bracket and only cash out and live off mutual funds (long term cap gains taxed at 0%), does that mean your taxes due at the end of the year will be *zero*?
More or less, yes. In my experience, a portion of the dividend that many index funds pay out is not considered a "qualified dividend," which means you'll pay regular income tax on this income. But if that income ends up being less than your standard deduction/personal exemption(s), and the rest of your income is long term capital gains and qualified dividends, you could very easily have no federal income tax liability.
Federal Tax Summary | |
Income: | $90,000 |
Adjustments: | $0 |
Adjusted gross income: | $90,000 |
Deductions: | $12,200 |
Exemptions: | $7,800 |
Taxable income: | $70,000 |
Tax computed on Qualified Dividends Capital Gain WS: | $0 |
Alternative minimum tax: | $0 |
Credits: | $0 |
Other taxes: | $0 |
Payments: | $0 |
Underpayment penalty: | $0 |
Federal Refund: | $0 |
My understanding is you don't have to pay quarterly, but you'll face penalties at the end of the year if you owe too much.
Does this mean that if you stay in the 15% tax bracket and only cash out and live off mutual funds (long term cap gains taxed at 0%), does that mean your taxes due at the end of the year will be *zero*?
My understanding is you don't have to pay quarterly, but you'll face penalties at the end of the year if you owe too much.
Does this mean that if you stay in the 15% tax bracket and only cash out and live off mutual funds (long term cap gains taxed at 0%), does that mean your taxes due at the end of the year will be *zero*?
More or less, yes. In my experience, a portion of the dividend that many index funds pay out is not considered a "qualified dividend," which means you'll pay regular income tax on this income. But if that income ends up being less than your standard deduction/personal exemption(s), and the rest of your income is long term capital gains and qualified dividends, you could very easily have no federal income tax liability.