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Could you expand a little on why LT capital gains influence the tax bracket if they are supposed to be taxed at either at 5% or 15%?

If you look at Part IV of Schedule D you'll see that it shifts the rate at the top of the 15% bracket. That's all I meant.

Also, I thought the max SS would affect my scenario as opposed to the original. But, if I understand you correctly then AGI minus SS is the nut for IRA and capital gain income?. (SS entirely taxed in 15% bracket?)

Completely wrong; sorry if I somehow mislead you. Peter has already briefly discussed taxation of your SS benefit. The portion of it, if any, that is taxed is taxed the same as any other ordinary (non-capital gain) income.

Maybe it would be easiest for me to understand if given $0 IRA income, $75,900 capital gains, no SS. Is the tax 5% or 15%?


I'm really mixed up. Believe it or not, I entered taxes for a CPA 10 years ago. I think TT is throwing me. I'm used to entering data directly? not through questions. I'm using the "free 2003" version of TT.

I would like to be able to enter various data assumptions (not through questionaire) and see/print the different results. Do I need to buy the 2004 TT to experiment like that? enter data directly? (I won't file using TT for 2004. Still need a professional for a few more years.)

Finally, what are your thoughts on how to use the 2008 window for zero capital gains tax?

Well, when I'm having trouble getting to sleep I fanticize about winning a big lottery jackpot. Planning for zero cap gains tax in 2008 will be about the same level of fantasy.

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