LONG-TERM CAPITAL GAINS AND QUALIFIED DIVIDENDS

Long-term capital gains (and qualified dividends) are taxed at favorable tax rates.  The tax rate depends upon your taxable income and filing status.  These gains are taxed either at 0%, 15%, or 20%.  The important planning opportunity is presented by the 0% tax rate.  If you had securities that you could sell, incur a long-term capital gain, and pay no tax, that’s not a bad deal.  But you could then repurchase those same securities at their present value resulting in a higher tax basis at no cost to you.  That’s a win-win. 

Following are the taxable income thresholds for the 0% tax rate:

·         $77,199 married filing joint

·         $51,699 head of household

·         $38,599 single

Additionally, if your taxable income exceeds these amounts, a portion of your long-term capital gains may still be taxed at 0% depending upon the extent that your taxable income does exceed these thresholds.