Can Capital Gains Push Me Into a Higher Tax Bracket?

Ready For Retirement

James Conole, CFP®

Investment Planning, Bonds, Education, Stocks, Cash, Business, Dividend Investing, Retirement Planning, Retirement, Investing, Tax Planning

5 • 706 Ratings

🗓️ 9 March 2021

⏱️ 22 minutes

🔗️ Recording | iTunes | RSS

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Summary

Our topic on this episode of the Ready for Retirement podcast is about understanding if capital gains can cause you to move into a higher tax bracket. Questions to ask ourselves: Are there different tax brackets for Ordinary Income v. Capital Gains? When does it make most sense to realize Capital Gains? How should I be approaching tax planning as I near retirement? How should I be approaching tax planning if I’m already retired? How can I minimize my tax bill with proper tax planning, both fo...

Transcript

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0:00.0	Discover the tips and strategies that will help you achieve your retirement goals.
0:09.3	I'm your host, James Canole, and this is the podcast dedicated to helping you retire well.
0:14.6	It all starts right here on Ready for Retirement. for retirement.
0:27.1	Hi, everyone.
0:29.0	Welcome back to another episode of Ready for Retirement.
0:30.1	I'm your host, James Cannell.
0:33.4	Today, we're going to be talking about taxes.
0:36.4	And taxes are one of the more confusing aspects of finance.
0:38.5	I think maybe for, maybe for everyone. And specifically, we're going to be talking about one of the more confusing aspects of finance, I think maybe for, maybe for everyone.
0:43.6	And specifically, we're going to be talking about one of the more confusing aspects of the confusing subject of tax. So what my goal is today is my goal is to help simplify this as
0:49.7	much as possible. Because within taxes, a lot of people they want to know, how do capital gains work?
0:56.7	There's the ordinary income tax. There's capital gains tax. And a lot of people, they ask the
1:00.9	question of can a capital gain, so if I invest and grow my money, I have a capital gain,
1:05.8	do capital gain taxes push me into a higher tax bracket? So that's the topic for today's episode.
1:12.9	And before I go much further, a lot of us, we know how generally how taxes work. There's a
1:17.4	progressive tax rate. The first $19,900 of taxable income, if you're married finally
1:23.4	jointly for 2021, it's taxed at 10%. The next amount from 19,900 to 81,050, it's taxed at 10%. The next amount from 19,900, 881,050, it's taxed at 12%.
1:31.8	The next amount above that, it's taxed at 22%, and then 24, 32, 35, 37. Those are the ordinary
1:38.0	income tax brackets. We also know that capital gains usually have better taxes. So if you invest and you hold an investment
1:45.9	for more than one year, you pay a lower tax on that when you realize that gain than if you were to
1:51.3	hold that investment for under a year. And you pay a lower tax than you would just an ordinary
1:55.5	income as a whole. So the long-term capital gains tax rates, they range between 0, 15% and 20% at the federal level.
	...

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