The Motley Fool Discussion Boards

Previous Page

Financial Planning / Tax Strategies

URL:  http://boards.fool.com/this-appears-to-be-a-good-strategy-to-reduce-30533609.aspx

Subject:  Re: Why Not Take Gains in UTMA? Date:  2/9/2013  10:32 AM
Author:  ptheland Number:  117705 of 121339

This appears to be a good strategy to reduce future taxable income by 10's of thousands.

Slow down, there. It's a good strategy to reduce future taxable income by $1900 this year. And another $1900 next year. (In practice, it's a bit less, as you'll have some interest and dividend income already.)

Remember that if her taxable income exceeds $1900 - even if some or all of that taxable income comes from long term capital gains and qualified dividends - the amount over $1900 gets taxed at your rate.

With a 12 year old, that will get you close to $20k in total cap gains over the next 10 years. Likely a bit more as the $1900 will get adjusted for inflation each year. So I guess that is two 10s of thousands. But even with inflation, you're not going to get to $30k for an accumulated total in the next decade.

--Peter
Copyright 1996-2014 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us