With the huge gains since the Presidential election in the stock market, we believe many are thinking about pocketing gains. We wanted to remind everyone that for single taxpayers with incomes below $50,700 and married couples at $101,400 of income, there are no capital gains tax rates for taxpayers when they realize gains on the sale of stock investments. You heard that right, a 0% tax rate where their other income tax bracket is 15% or less. For those above those levels, the capital gains rate is 15%. The limit is $68,000 for married filing separately, which is the same as filing single and head of household.
So, realize those profits if you want. There is also a quite valuable tax planning opportunity to monitor this all toward year end. If you determine you will be in this low capital gains rate bracket, consider selling stocks with gains to lock those in tax-free (other than state taxes). You can then go back into the market and buy back those securities at roughly what you sold them for and start fresh with the much higher stock basis. Any future capital gain tax will be minimized and if the stocks go down, you might even get a deduction to offset other gains that you wouldn’t have had, if you didn’t realize the gain at a 0% tax bracket. And don’t worry about wash sale rules, they only apply to losses!
Do you need your tax returns evaluated for the new tax year? Czarnowski & Beer is currently offering a complimentary, no-obligation tax return evaluation. To take advantage of this limited time offer, visit our tax return offer page or contact us at email@example.com or call (212) 397-2970 and we will be happy to help you and answer your questions.
Please note, this offer is subject to change or expire without notice any time after May 30, 2018. Please confirm with Czarnowski & Beer if you are reading this blog post after this date. Thank you.