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Financial Planning / Tax Strategies


Subject:  Re: Retroactive changes to tax rates Date:  5/14/2021  9:11 PM
Author:  MakingTrax Number:  132691 of 132989

AJ writes:

"...given that in 2021 for MFJ who are both over 65, there is a $27,700 standard deduction, it's actually quite likely that you would still be in the 0% LTCG bracket. 85% of your SS income would be taxable, so that's $20,400 of taxable income."

I think that first calculation is off. The SS income is $40,000. 85% of SS income would be $34,000 in taxable income.

So after applying the $27,700 standard deduction, you would have $6,300 in taxable income based on SS. To remain in the 0% capital gains bracket, you could have up to $74,500 in capital gains ($80,800 - 6,300 = $74,500). Not quite as much per AJ's calc, but as pointed out, still plenty of buffer for your anticipated $60,000 cap gains sale to fall with in the 0% cap gains bracket.

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