Welcome Guest. Register Now!  



Reply
 
LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 01-12-2014, 04:57 PM
Junior Member
 
Join Date: Nov 2013
Posts: 14
No federal tax

Here's the scenario. Can you let me know if I'm correct or not please?

If I decided to stop working and live on my capital gains and my long term capital gain is let's say $100,000. I will not have to pay federal tax because I'm in the 10% tax bracket ($0 taxable income). In other words, I'll keep $100,000 all to myself.

Is that correct?

PS: I live in CA so I still have to pay CA state income tax on $100,000 but let's ignore state income tax in this scenario.

Thanks



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #2 (permalink)  
Old 01-12-2014, 09:13 PM
Moderator
 
Join Date: Oct 2010
Posts: 5,236
Quote:
Originally Posted by hoangtu69 View Post
Here's the scenario. Can you let me know if I'm correct or not please?

If I decided to stop working and live on my capital gains and my long term capital gain is let's say $100,000. I will not have to pay federal tax because I'm in the 10% tax bracket ($0 taxable income). In other words, I'll keep $100,000 all to myself.

Is that correct?

PS: I live in CA so I still have to pay CA state income tax on $100,000 but let's ignore state income tax in this scenario.

Thanks
no;you need to report the LTCG of $100K on your 1040 line 13 and you need to pay CG tax of 15% as long as yur marginal tax rate is higher than 15% due to the LTCG of $100K. I guess you can follow the isntructions of 1040.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #3 (permalink)  
Old 01-13-2014, 01:53 PM
Junior Member
 
Join Date: Nov 2013
Posts: 14
Thank you very much



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #4 (permalink)  
Old 01-13-2014, 02:01 PM
Junior Member
 
Join Date: Nov 2013
Posts: 14
Cost basis and no tax

Here's the scenario.

Let's say I have $100,000 and I bought mutual fund and now it's $150,000 so my long term capital gain is $50,000 (Assume there's no auto-reinvestment into the mutual fund).

Let's say I quit my job so I have salary of $0. If I withdraw $25,000 every year from the mutual fund for my living expenses. I don't have to pay federal and state taxes on this $25,000 because that's my cost basis right?

After 4 years, $25,000 * 4 = $100,000 (cost basis) then when I withdraw $ from the $50,000 capital gains then and only then that I will pay state and federal taxes.

Am I correct?

Thanks



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #5 (permalink)  
Old 01-13-2014, 02:33 PM
Moderator
 
Join Date: Oct 2010
Posts: 5,236
Quote:
Originally Posted by hoangtu69 View Post


I live in CA so I still have to pay CA state income tax on $100,000.
it is correct



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #6 (permalink)  
Old 02-03-2015, 10:07 PM
Junior Member
 
Join Date: Feb 2015
Posts: 2
I know this is lat year question, but the answer you were given was incorrect.
There will be no takes on $100000 LTCG for a couple filing a joint return and taking the standard deduction. This is waht Turbo Tax says.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #7 (permalink)  
Old 02-04-2015, 03:52 AM
Moderator
 
Join Date: Oct 2010
Posts: 5,236
If I decided to stop working and live on my capital gains and my long term capital gain is let's say $100,000. I will not have to pay federal tax because I'm in the 10% tax bracket ($0 taxable income). In other words, I'll keep $100,000 all to myself.

Is that correct?======>>>>>>>>>>no;you need to report your capital gain on sch D part 2 ; 8a, line 15,16, 17, on 1040 on line 13, 22,37, 38 and also you must Complete the Qualified Dividends and Capital Gain Tax Worksheet to calculate tax liability in the instructionsfor Form 1040, line 44

PS: I live in CA so I still have to pay CA state income tax on $100,000 but let's ignore state income tax in this scenario==========>>>>>>>>It so happens that your ordinary income tax bracket is calculated by adding your capital gains to your ordinary income. So in the example YOU gave in the question, those hundreds of thousands of dollars of capital gains income would put you in a high tax bracket, so you would have to pay capital gains taxes based off that tax bracket (probably 20% for long term and 39% for short term in the worst case scenario).



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
Ads
Reply


Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
On my W2 form, I put a '2' under my federal allowance, now I don't get federal tax taken out. KNictivity Miscellaneous 1 01-24-2012 04:57 AM
more $ from state than federal??? tjackels Estimated Taxes 1 03-19-2011 03:57 AM
Federal Gift Tax kfuchslin Estate Planning 0 02-16-2010 03:33 PM
Why is my federal return so low? strawberries404 Estimated Taxes 1 02-02-2009 11:54 PM
re: federal rebate kiffersikes Miscellaneous 1 02-27-2008 04:30 PM

Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 
Individual
 » Income
 » IRA/Sep
 » Medical
 
Corporations
 » Payroll
 
Forum for CPAs
 
Financial Planning