Almost every portfolio will one day need to support a steady withdrawal as your savings turns into your retirement money. However, to turn your investments into money you can spend, some securities need to be sold. Every time a security is sold in a taxable account, if it is worth more at the time of sale than you originally paid for it, the “gain” is taxable. This so-called capital gain is taxable in various federal tax brackets, ranging from 0% to 23.8%.
If you wait to sell any securities until the day you make a withdrawal, chances are you will be forced to realize some rather large capital gains all in one year. After all, the markets trend upward and, over large time periods, double every 7 to 10 years.
There are many techniques to manage your capital gains for smart tax planning.
For clients in the 0% capital gains tax bracket, intentionally realizing some gains each year can keep taxes relatively low.
For others, we have many strategies for avoiding paying the capital gains tax.
For those at the highest rates, we harvest capital losses as they occur and then use them on current and future taxes as part of a Tax-Loss Harvesting plan.
How To Use a Capital Loss Carry Forward
Think of your capital loss carry forward as an asset you have banked which provides a defensive buffer for your taxes.
How To Use a Marotta Capital Gains Tax Hurdle Report
These complex formulas help decide when highly appreciated investments should be sold and the proceeds put in a different investment philosophy.