Here's how to pay 0% tax on capital gains
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- Опубліковано 20 жов 2022
- CNBC's Sharon Epperson joins 'Squawk Box' to break down what a shift in the federal tax code due to inflation adjustments means for some U.S. taxpayers. For access to live and exclusive video from CNBC subscribe to CNBC PRO: cnb.cx/2NGeIvi
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Buying stocks might seem easy, but picking the right one without a solid plan is tough. I've been trying to grow my $100K portfolio, but the tricky part is not having clear plans for when to buy and sell. Any tips on this would really help.
The strategies are tough for average people. They're usually done well by experts with lots of skills and knowledge.
@@RomanTommy I agree. From my own experience with an investment advisor, I've got $1 million in a diverse portfolio that's growing fast. It's not just about having money for stocks; you need to know your stuff, stay determined, and be resilient.
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@@imohimoh3441 VICTORIA CARMEN SANTAELLA is the licensed advisor I use. Just search the name. You’d find necessary details to work with to set up an appointment.
@@LiamOlivia-4 Thank you! I entered her full name into my browser, and her website came out on top. I filled her form and i hope she gets back to me soon.
These tax rules r too much complicated on purpose i think
So is English apparently
@@tigreytigrey8537 there's literally nothing complicated about "sell $120k of stocks and pay no federal taxes"
Over 70,000 pages of tax code as of 2008. Probably over 90,000 pages by now. Even accountants admit they've never read it all.
@@widehotep9257 just double up on jobs at earliest age, 16. Invest maximally in regular brokerage accounts, like e trade. Study the dow gold ratio, and buy either Dow correlates or gold correlates based on the ratio. Buy with leverage. Long-term holdings. By healthiest birthing ages, 21, marriage to someone similar. Buy a small house in cash and make your babies. Teach them how to repeat 🔁 this. Start over with your grandkids, great grandchildren, and great great grandchildren.
No only that, but at the same time, they can put you in jail if you made a mistake when the government wants to.
Thats when the corrupt made money and its so they dont pay tax
While we have inflation ( printing money) how come capital gain would be a profit? It does not make sense.
Yes, paying taxes on inflation seems ludicrous. But if you think about it, the inflation is partially responsible for the increased valuation. So you’re really just giving the government a cut.
Exactly . That's the only way to not pay taxes.😅
Is to lose in the stock market
Does the qualifying income level include the capital gain for that year, (ie, if you earn $50000, but sell a house for a gain of $70000, is your qualifying income $50000 for a zero percent gain, or $120000 for a 15% taxable gain?
Your income of 50k is taxed at the standard rate which would be an effective tax rate of 11.4 percent ($4,118). The 70k profit you made on the sale of the house would be taxed at the capital gains tax rate of 15 percent ($10,500). So, you would make 120k in the year and you would be taxed an effective tax rate of 12.18 percent and would pay $14,616 in taxes making a net income of $105,384.
Let's contrast this and say that you made 120k per year from your job only and didn't sell the house you would go up in your tax bracket and be taxed an effective tax rate of 17.8 percent. You would then have to pay $21,360 in taxes with a net income of $98,640
So, by selling the property rather than working for the extra money you would earn $6,744 of savings from federal taxes (however, that is only if you held the property for at least 1 year).
For your standard income you would be taxed through the year out of your check and receive a refund or a bill based on your withholding and deductions, and then you would be taxed at the end of the year for the profit that you made on the sale of the house (so you would want to withhold $10,500 from the 70k profit you made to pay your taxes).
The way people manipulate this is by receiving a salary to keep them in a lower tax bracket, and then they are issued assets (such as stocks and bonds), and they hold them for more than a year.
So, let's say you make a 50k salary and you are taxed 11.4 percent ($4,118) and instead of selling the house for a 70k profit, you instead sold 47k worth of stocks and bonds that you have held for at least a year. In this scenario you would make $50k and pay $4,118 in taxes leaving you with $45,882. Then you would sell the stocks and bonds for 47k. The 47k is considered a "long term capital gain" and would be taxed at 0 percent.
You would then add the $45,882 that you made from your salary to the $47,000 of profit that you made from the sale of your long-term assets giving you a net income of $92,822.
So, as you can see out of these 3 scenarios the last one is the most profitable since you made $92,822 in the year and you only ended up paying $4,118 in taxes. You saved $17,242 in taxes compared to working a 120k per year job and you still made almost as much in the year and you also saved $10,498 in taxes by doing that rather than selling the house.
So, you made almost the same amount of money plus you get to keep the house, but you are out 47k in stocks/bonds or whatever long-term assets that you sold. You are still up though because the house is worth 70k (profit), so you are still up 23k on it. You essentially made $115,822 in the year.
I think you can see how this can be further manipulated by people who are truly skilled (not me).
Make it 0% on the first million dollars. What the hell is 0% up to $44k-$50k going to do for the average person to get ahead?
Capital gain, should be talking about capital loss
HUH? Loses?
Record S&P, DOW & Nasdaq ....
Do you let someone else invest for you?
You can write off up to $3000 in capital losses per tax year.
Does the money you use to transfer from a traditional Ira to a Roth IRA count as income?
No but it is taxable. It is unearned income. Earned income is from a job.
Yes, it's a good idea to do that if you have a big loss in your traditional. You will have to pay tax when you do a backdoor Roth.
@@tonynunez6539 Idiot.
What is the amount you can transfer
Yes, you should be getting a 1099-R. Your contributions and gains will be taxed as income.
Tax deduction should be added for each kid. Doesn't make sense that you have no deduction for kids (except for trump tax credit)
I disagree. It's your choice to have a kid.
Parents are already getting 2k tax credit for each kid. What else do you want?
@@jps101574 no they aren't .
Tax credit is 3000$. That translates into 600$(20%) savings.
This is just 8% of a standard deduction.
No wonder there is no incentive for bringing children and we have demographics disaster going on which is only being averted due to immigration
I don't need any tax breaks. So I don't want anything
@@maxandersen6532 sure..let's give subsidies to everything!!! except for what is absolutely crucial for the society...
@@ziaulislam87 Meant to say 2k.
BTW, it isn't $600. That would be a 2k deduction. This is a credit which directly reduces the tax owed.
you dont need a ROTH IRA then if you are married and withdrawing less than 100,000 from your investment annually
Let's say you are sued, civil lawsuit, and they win and go after you. It can happen to anyone in this country. Believe me, at least (Today) the ROTH or any IRA money, they can't touch it. Much better to have a bit in an IRA in case.....
They are lessening their extortion?
😂🤣👌 Right. I think they're going to therapy finally
so it's earned income she's talking about, or is she talking about the total income inclusive of cap gains?
44k earned +100k cap gain -> 0% tax on 54k or 0% on 100k?
I think in your case you would have 0% capital gains taxes on 89k-44k of your capital gains, then you would pay 15% on the remaining capital gains. So you'd pay ordinary income tax on 44k, 0% CG on 55k of cap gain, then 15% on 45k cap gain. Keep in mind too if you sell 100k of stock or assets, you only factor in gains, not principle.
Gains? At this rate losses for next 10 years
Couple making 100K in california are really struggling to live day to day.. they cannot afford to gamble money on stocks
Well in Georgia you’ll live lovely‼️
Good. No capital gaines since 2021: pure losses. Save me some efforts in taxes.
It’s time to defund government.
lmfao what is this "capital gains" you speak of?
Can someone help me please?
I have read that non-residents alien do not pay capital gains but I do not know how to declare it... I made the purchase and sale as an LLC, therefore I filled out form 1065 and K-1 to each partner (2 owner , non resident aliens). From there I don't know how to transfer to Form 1040NR that capital earned in the stock market.
some say i shouldn't even fill it...
Did you find a solution yet?
So how'd that work out because we're facing it again 😂
@@ulisesaparicio1353 I still can't find an answer... I just read a blog where it says that non-resident aliens do not pay taxes on capital gains in the USA... but I don't know how to do it. I already sent the form 1040NR without paying with a letter saying that I was not responsible for paying because I was a nonresident alien, but they sent me a letter with the charge, I preferred to pay, now I am in the same situation...I WILL CONTINUE TO FIND OUT
@@karelglasner2673 I still can't find an answer... I just read a blog where it says that non-resident aliens do not pay taxes on capital gains in the USA... but I don't know how to do it. I already sent the form 1040NR without paying with a letter saying that I was not responsible for paying because I was a nonresident alien, but they sent me a letter with the charge, I preferred to pay, now I am in the same situation...I WILL CONTINUE TO FIND OUT
Miss leading? Ordinary income and capital gains are stacked.
but if you have a job that pays 50k then you exceed the threshold and wont qualify
Shame on CNBC for trying to cover this complex topic in two minutes. Based on the comments, the viewers were left terribly confused.
Let's focus on the 2023 maximum of $44,625 of "taxable income" for Single taxpayers to qualify for zero percent capital gains. (Although not mentioned in the video, qualified dividends also are taxed at what is known colloquially as the "capital gains" rate, but I digress.) What I am about to say also applies to the Married Filing Jointly filing status, although with different amounts, but I don't want to repeat myself.
What the "Senior Personal Finance Correspondent" never got around to explaining is that "taxable income" is more inclusive than just your salary minus your standard deduction. It also would include interest, dividends, etc., PLUS realized capital gains.
Your salary minus your standard deduction, plus any interest, unqualified dividends, or short-term capital gains would be taxed at the rates for ordinary income. Your long-term capital gains (and qualified dividends) would be taxed at the "capital gains" tax rate.
As one or two others have commented, the long-term capital gains (and qualified dividends) are "stacked" on top of the ordinary income (e.g., salary minus your standard deduction, plus interest, unqualified dividends, or short-term capital gains) to determine if the $44,625 maximum threshold for taxable income has been reached.
The "Senior Personal Finance Correspondent" incorrectly implies that if you are a single taxpayer, all you have to do to qualify for unlimited capital gains at the zero percent rate is to keep your salary minus your standard deduction to less than $44,625. However, if the maximum threshold of $44,625 of taxable income has been exceeded before including long-term capital gains (or qualified dividends), you do not qualify for the zero percent rate.
For the first example, if your salary minus your standard deduction was $45,000, you already exceeded the $44,625 maximum threshold and do not qualify for the zero percent rate on long-term capital gains (or qualified dividends).
For the second example, if your salary minus your standard deduction was $44,000, it would be taxed at the ordinary income rates. Since you already used up $44,000 of the $44,625 maximum threshold, you would only be able to recognize $625 in capital gains (or qualified dividends) at the zero percent rate. All long-term capital gains (or qualified dividends) above the $625 would be at the 15% rate. (At least if you stayed within the $492,300 maximum threshold for the 15% rate.)
For a third example, if we again assume that your salary minus the standard deduction was $44,000, but you also earned $700 in interest, your taxable income would be $44,700. The $44,700 would be taxed at ordinary income rates. At $44,700 of taxable income, you already would have exceeded the $44,625 maximum threshold that would have qualified you for zero percent capital gains. In this case, any additional long-term capital gains or qualified dividends would be taxed at 15%, unless you somehow had $492,300 of them.
For a fourth example, assume that your salary minus the standard deduction was $44,000, but you also earned $700 in qualified dividends, making your taxable income $44,700. The $44,000 would be taxed as ordinary income. You would still have $625 ($44,625 - $44,000) left in the zero percent bracket. The remaining $75 ($700 earned - $625 taxed at zero percent) of qualified dividends would be taxed at the 15% "capital gains" rate.
Congratulations if you made it until the end. As I said at the beginning, the topic is too complex for a two-minute segment.
WOW $6k SOOOOO MUCHHHHHHHHHHHHHHHHHHHHHHHH, that helps FEW MIDDLE CLASS AMERICANS
NEXT YEAR, THE STOCK MARKET IS SO FAR DOWN NO ONE CAN COLLECT LONG TERM CAPITAL GAINZ
Here we are a year later…how wrong you were. Market breaking records.
I was being facetious @@daversj
@@daversjyup
if someone could understand all this.
If you don't understand something so simple you shouldn't be investing in the stock market.
@@ent1311 did your ego exploded today? Btw world don't need people like you in case you didn't know
@@ent1311 ohhh hurt you??
@@janosik150 how would I even get hurt by your comment? Don't get a stroke thinking about it. 😭
Too bad average American sold Between last year high & 2022 lows. Nobody gonna benefit until 2024
This was explained so poorly. Sad it was on a financial show.
Its on purpose the tax code so difficult and has several loop holes as well...
“Captial”
Itemized tax deductions don’t lower your tax bracket. This video is completely wrong. Complete misinformation.
By losing money.
People making $40k or less are not likely investing in the stock market.
Say you're retired with investments only and have no income from a job, say those investments pay a nice capital gains income. There's no tax up to the thresholds she mentioned.
@@AS-gf5jn good point. If you made/had $80k in capital gains, I wonder if the first 40 are tax free.
If I am making a profit, I am not worried about paying taxes.
You should.
You should be, your losing money for making a profit... you gotta pay that later unless you buy another home within the allotted time frame or invest it in a smart way.
You should as taxes will go up....
So you are/ have thrown away a portions of paycheck every time you didn't spend it?
I taking a guess you are lying about not caring.
Not sure I want to take financial advice from someone that misspells CAPITAL gains.
You pay 0% on capital gains when you have no capital gains. Which is decided for us by the FED.
Y
Lol people at those low income levels likely aren't worried about capital gains tax rates.
Oh yes they are. If you're retired with investments only and have no income from a job, and those investments pay a nice capital gains income. There's no tax up to the thresholds she mentioned.
@@AS-gf5jn most definitely are not. The average person isn't even familiar with capital gains taxes let alone the nuances. I've literally been advising people on finances north of 15 years but you're the expert huh? 😂
@@BlakeC341 If that was a brag I feel sorry for whomever takes your advice!
@@AS-gf5jn more comical ignorance. If you're unable to exercise common sense, let me dumb it down for you. To be in business for 15+ years people have to pay for your services and the vast majority of my business comes via referrals. But keep making naive assumptions, you know what they say about those.
@@BlakeC341 I know more than you and you do this as a job. That's why people are clueless they listen to dumb experts like yourself. Sad isn't it.
MY FINANCIAL GOAL IS TO BE MAKING AT LEAST UP TO $1,000,000 EVERY YEAR BY INVESTING HEAVILY BOTH IN CRYPTO AND STOCK. I NEED GUIDIANCE. please comment below..
@Diamond Ray that is totally true, but how well does a financial advisor improve your profit? What is the experience like using an advisor?.
@Chanal Adams
how can i reach him?
People earning 40K and investing, worrying about tax rate is about as common as a leprechaun
I’m sick of complicated tax code, and shouldering the tax burden that the rich and the poor don’t pay.
Well you might as well exclude the poor. If I only made 20 grand a year I'm not going to pay 25% tax. If you want to pay less tax then go be poor. You make it sound like the poor folks have it easier or something lol well nobody is stopping you.
@@Mellow4202 I don’t think you understand what I’m saying. The rich, and the poor, are getting the benefits of the taxes paid by folks in the middle. They don’t pay their fair share yet they take the biggest part of the benefits. And tax code shouldn’t be so complicated that tax attorneys or CPAs are needed to file a return.
That's why inflation is high. #TRUMP2024
Run your casino into bankruptcy?