Any tax laws we should know about?
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JLeslie (
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May 31st, 2019
from iPhone
Just wondering if jellies want to share some American tax law tips and pitfalls?
I recently found out if you make less than $78k adjusted gross income you pay zero tax on long term capital gains. Zero tax! I don’t know if that’s new with Trump or has been the case for a long time.
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7 Answers
That sounds new to me… What’s a “long-term” capital gain for that purpose?
@Zaku I looked up the law because I’m selling an investment property. I’m guessing it applies to any long term capital gain though. Long term is over a year.
I didn’t find the article I read originally, but this seems to have the same information. https://thecollegeinvestor.com/23577/capital-gains-tax-brackets/
Previously, when I sold an investment I was making more money, so I didn’t realize under a certain amount the tax is zero, that is if it was zero back then. The thing is the gain does count as income, so even though my income is very low right now, the sale will get me close unless I defer some income to 2020. My eye is actually on the ACA cut off which is more like $64k, that ACA is terrifying. I’ll owe over $12k just in ACA money if I make too much money.
I’m confident that was not a rule in the past. I’ve been and known others who had capital gains vested over a year and made less that $78K AGI, and still had to research and fill out the annoying forms and pay taxes on it.
It does sound like something that Trump and his cronies and masters would absolutely love…
Ok, I did some research and it looks like the minimum dropped from 10% to 5% in 2003 and then there started being 0% brackets for it in 2008.
https://en.wikipedia.org/wiki/Capital_gains_tax_in_the_United_States
Springtime for Wall Street… sigh…
@Zaku Interesting. Thanks for looking that up. The good thing is at least people with low incomes are getting a bigger tax break than those with higher incomes, but people with high incomes have all sorts of ways to defer income that average income salaried workers can’t take advantage of usually.
Recently, I learned about a retirement annuity. Not an annuity inside of an IRA or 401k, but an annuity that you can move money into and it becomes sheltered from tax just like an IRA. WTH? As far as I can tell you can move as much money as you want into it. I told the woman who showed it to me, “I guess that’s a rich man’s tax loophole.” She replied, “yup.” The negative is there is a fee for the annuity, but still I couldn’t believe it exists.
@JLeslie Yeah, I think tax breaks for lowish-income people tend to be good things.
Your annuity fund does sound like it’s a tax dodge, and the fee I assume is going to some big money corporation rather than the IRS?
@Zaku I don’t have one of those annuities, it was just presented to me when I met with a Fidelity advisor. I had called Fidelity 800 for help with the IRA’s I did for my business last year, and then since there is a Fidelity office I walk by all the time I thought go ahead and talk to someone there. I’m just going to do a CD, and my husband had a question about his IRA. But, yes, a tax dodge and the annuity is issued by a corporation of some sort, I don’t remember the name, but she gave me a brochure. I guess the company issuing the fund has to report the fee as income, so the fee is taxable for that corporation?
That type of annuity is probably offered by a lot of financial institutions, I just had no idea it existed, no one ever mentioned it before, but I don’t meet with many financial advisors, I’m a CD very low risk type of girl, and I hate paying fees, so I’m usually loathe to invest in that sort of thing, but I’m not saying I never would.
Anyway, I found it shocking there was a fund like this and I had never heard of it before on TV. You would think with all of the accusations and tax talk that went around when Romney ran and now with Trump, that there would be more information.
The media sucks on this in my opinion. So little is really communicated to help the average person with taxes, and on the flip side of the same coin details aren’t out there for how the rich don’t pay taxes. The media talks about capital gains tax, but I have never heard that it is zero below a certain amount. The media talked about off shore money with Romney and others, but what average tax payer has off shore money? How does that help the average person with their own taxes? The average person barely has savings.
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