No. of Recommendations: 12
MataroPete asks,

<<I've never been much of a dividend investor preferring to take my investment returns as capital gains.>>


This brings up a couple questions: I assume these are LTCs so your tax rate is low; are these gains not considered income for purposes of Medicare and Obamacare?


Yes. Long Term Capital gains are considered income for Obamacare purposes. But you can match the sale of winners and losers in your portfolio to limit (or even eliminate) the taxable income while withdrawing a sizeable sum.

For example. Let's say I sell a $100,000 block of stock I bought years ago for $80,000. That's only a $20,000 capital gain (which is taxed at a 0% rate if I don't have any other income), but I get to withdraw the whole $100,000 from the account to fund my annual spending. And if your taxable income is only $20,000, it sets you up for a sizeable Obamacare refundable tax credit.

Of course, if you're a successful investor, you'll eventually run out of stuff with minimal capital gains that you can sell to keep your taxable income low, but I'm age 61 and only need to do it for 3 or 4 years until age 65 when Medicare kicks in. It would be tougher to do at age 40 and keeping it up for 25 years.

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