Okay, so to explain it further. I have 32k in ordinary income (after exemptions and st. deduction). I have 7k in LTCG and Qualified dividends. 39k total.
The limit for 15% is 36,250. Anything beyond that is at 25%. LTCGs and Qualified dividends are taxed at 0%, if your taxable income falls below the 15% line. Any dollars above 36,250 are taxed at 15%.
The LTCGs are straddling the 15%/25% bracket range. As such, for each additional dollar of ordinary income earned, it is taxed at 15% and one of my LTCGs dollars that was being taxed at 0% jumpes across the limit and is also taxed at 15%. Therefore, my marginal tax rate is actually 30% as a result.
That is why I want to lower my taxable income in 2013 (avoid 30%) and raise it in 2014 (pay 25%) for an automatic 5% tax savings. I know I will be entirely into the 25% tax bracket at work with the raise I will be receiving this year and my promotion bonus that will happen mid-next year.
I am already maxing out my Roth IRA contribution at 5,500 per year, and contribute 10% to my 401k at work. Cash flow wise, it would be difficult to contribute much more than that to my 401k. It's a stretch to be able to contribute 10% per paycheck. So, that makes the 401k option difficult. I would have to raise my 401k contributions to 17% for the remainder of the year. However, the money that will fund my Roth IRA is tied up until early 2014 in order to have LTCGs and not STCGs. Therefore, I would be contributing it post-2013 in the 3.5 month window that you are allowed to.
It's only a couple hundred bucks I would be leaving on the table if I did nothing, but I want to keep that money in my pocket.