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Hey everyone,

Quick tax question for you. This year I'm going to start making officer money so my income is going to go up drastically, but only for half the year, which means I should still be in the 15% tax bracket. Next year I will be in the 25% bracket b/c I will be getting paid for a full year.

My question is should I lock in all my long-term gains this year? From what I've read they will be taxed at a 0% rate b/c of my income bracket, so it's basically just a free way for me to lock in gains and then reallocate the funds (I've gotten a bit heavy in one stock that's done quite well for me) right?

Thanks!
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No. of Recommendations: 4
Difficult to answer without knowing a lot more about your personal situation. In general I'd say go ahead and take gains this year up to the point they are 0% taxed. Remember, however, if you have state income tax they might be taxed as ordinary income depending on your state. It also sounds like you are thinking you need to re-balance due to one stock getting overweighted. That's an investment decision to made even without the tax consideration.

Also, remember you can take the capital gain and immediately buy back any stock you want to continue to hold. Wash sale rules only apply if you are taking a loss.

Double and triple check your estimates so you don't accidentally kick your income beyond the point of 0% cap gains rate, but it sounds like you're thinking along the right lines. Just don't let the tax tail wag the dog when it comes to investment decisions.
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