Thank you, my mother a recent widow was surprised on her tax bill, and I can understand why now, in addition to the standard deductions.. She has an accountant who does her taxes, so she is paying the correct amount, just that her bill was a surprise.
You're a great teacher! I will be subject to Capital Gains soon and it's good to know exactly how they work. Will help me to calculate how much I can SELL. I'm also a retiree, so I need to keep Social Security and IRMAA in mind. At least if I seek out a TAX professional I'll be somewhat informed. Thank you!
Agree, great video. My remaining question (and something I haven’t googled!) is for large sales of stocks, should I be doing an estimated tax to the IRS at time of sale? (I have never sold meaningful $ after tax)
Add me to the list of people saying that this is the clearest explanation on UA-cam! Presenting ordinary income and capital gains side-by-side made it easy to follow. I also appreciated the detailed presentation of how the long-term capital gains stack on top of ordinary income. Actually, both qualified dividends and long-term capital gains stack on top of ordinary income, but I recognize that you might confuse part of your audience by trying to clarify that. My only disappointment was noticing that only 4,700 people viewed the video. You deserve a much wider audience! Liked and subscribed.
The two graphics showing how ordinary is first and LT gain is ON TOP OF ordinary combined with the LT floor and blended rates are golden! It's very tedious to go through that on my turbotax worksheet. Thanks for explaining this is the perfect level of detail.
I am impressed with your update, I am looking for tax efficient way to rebalance my 7-figure dividend portfolio without triggering capital gain tax. what asset allocation strategies should i use?
The best strategy depends on your financial situation, account types, tax bracket, and investment goals. Consult an advisor or tax professional to tailor these strategies for maximum tax efficiency.
I’m currently working towards financial freedom with a focus on dividends & growth investing. Since 2014, I’ve built a portfolio made up of 30% NVDA, 25% SCHD and over 40% in digital and alternative assets, thanks to my CFA. This strategy has helped me earn 56,000 a year in dividends. Back in 2014, I only earned $21 in dividends.
@@PatrickLloyd- Oh I've heard similar things about hiring an advisor. It's hard to choose one that's very good though. Could you make some useful recommendations?
I've stuck with SOPHIE LYNN CARRABUS since the pandemic, and her performance has been consistently impressive. She’s quite known in her field with over two decades of experience, simply look her up.
Being a great TEACHER is completely separate from being a financial expert. I finally understand this clearly! Your charts are the best on YT. Stellar work.
I actually recreated the 1040 including that line 16 worksheet in Excel to figure out how my capital gains and regular income is taxed - I reverse engineered it - and figured out much of what you presented here, but your explanation still clarified a lot. Thanks! We’re still in our 50s, and my strategy is to realize as much capital gains as I can each year, while remaining in that 0% bucket.
Ditto everyone else! This was a clear concise explanation of this topic, which I've never quite understood (what with using Turbo Tax, which doesn't really explain anything it's doing.) But within 10 minutes you explained this in a way that was easy to understand and to remember.
THANK YOU! This is exactly the questions and answers I need. I have been harvesting LT cap losses so long that now I only have a few years to harvest gains before pension, SS, and RMDs kick in and raise my bracket.
Very good. I was wrong in thinking that the capital gains were taxed differently until he explained it clearly with his illustrations. Now I understand. Thank you for sharing.
Excellent presentation! The charts helped me finally to understand how capital gains get stacked on top of ordinary income...after 40 some years of filing taxes! Thanks!
Don't forget about your standard deduction. Basically as long as your other sources of income are equal to, or below your standard deduction (or itemized deductions), you can maximize the 0% long-term capital gain bracket. I've got another video in the works on this.
Super helpful, planning on retiring at 52 using my RSUs to fund my retirement until I can draw from 401k. I had some holes in my understanding of how the LT capital gains was taxed and your charts and explanation filled those holes. Thanks!
This is the best video that I have seen explaining the correlation between ordinary income/capital gains and how they influence each👍👍 Very nice and educational! Going to share it with my friends.😊
That’s the best explanation so far among those l have watched on UA-cam, one of your standing out from others is your neat figures/examples. Great job Ted
Ted - First time I caught one of your videos. Well done laying out the camptal gains brackets. I was able to jetason some stock options over the years at 0% when I retired at 60 ten yerears ago. Frankly - I educated myself and qualified for the 0% bracket keeping my totals under the IRMAA threshold. Again - excellent presentation!
Thanks - that was very helpful. The examples with charts helped tremendously. Previously could not understand what others meant by gains being "stacked on top". Would really appreciate it if you would do another similar episode on qualified, non-qualified dividends, and interest income and its effect on tax brackets. I think I know the answer from watching this, but confirmation would really be helpful. Thanks very much for your efforts.
I watched LOTS of videos about this subject and always came away feeling I was missing something. This was the first video that cleared up a lot of my questions & concerns about this subject. Thank you so much for your time & effort…I now understand 👍 Qualified dividends also fall into that ”Capitol Gains” bracket bucket as well…right?
You did an Amazing job of explaining taxation and the different income buckets. Because of your clear explanation I am going to change my 3 different accounts around to take advantage of the taxes (asset location). Thank you for your expertise.
i have explained this to my wife every time i do a quarterly estimated tax payment but your nice side by side chart hopefully makes it easy for her to understand. in early retirement my "income" subject to marignal rates is only from roth conversions and we live off liquidations from my taxable brokerage. i was planning on buying some rectangular magnets of different colors to use on a whiteboard along with the different tax brackets to show how the income stacking is in our particular situtaion.
8:15 : Tip : Send this tax worksheet with your tax form! The IRS sent me a mail audit b/c it was (wrongly) about to tax my capital gains as ORDINARY INCOME, which is taxed at a higher rate! Anyone who says that if you fill out your taxes correctly, you have nothing to fear from the IRS is completely WRONG.
Thank you for the very clear explanation. I've been adding to my mutual fund positions for 20+ years, but have never sold until this week. Now I have a better idea of what to expect when I filed my tax return next April.
Thanks. One of the best explanations with pictorials, almost anyone can understand the way you put it all together. You should become teacher, you got the skill.
It would be great to compare the amount of tax on $150k of normal income vs. $50k of normal income and $100k of long term capital gains. I imagine the one with capital gains is much less.
The "ordering rules" convention is one of the most confusing, convoluted and non-intuitive in all the tax code. This is a great explanation of what's going on. Thank you! By the way, it's just another way Congress "means-tests" your tax bill.
Finally, the clearest explanation of the interplay between ordinary income and capital gains. Thank you 🙏. Closing with an enhanced example showing both income and capital gains straddling brackets was super helpful.
I would agree. With investing, chance plays a major role. By contrast, retirees can often be very strategic with the amount of income that hits their tax return.
Best explaination I've seen on the subject of how earned income and interest can reduce the "zero bracket" on dividends and LTCG. I stumbled on this while looking at other tax situations. Another topic worthy of explaination is the "Inflation Reduction Act" limiting Health Insurance premiums to 8.5% of ALL income. A good strategy is to minimize or postpone income through 2025 since 8.5% on top of State and Federal taxes is a pretty heavy hit. Here in CA my upper bracket is 9.3%, 12%(Fed),8.5%(APTC) totaling 31%. The same income for 2026 would be only 22.5%.
This was very helpful, thanks Ted. I plan to liquidate securities to buy retirement real estate, and will take considerable capital gains in the process. Now I know how to roughly estimate the tax impact. Liked and subscribed.
Great explanation for simple capital gains - what about selling primary residence - how is the tax on the gain applied - is there not a capital gains credit of $250K per husband and also wife? How does that work with your example... Thanks!
This was very concise and very clear. Thanks for allowing me to understand how badly I will be screwed at tax time next year. I sold my house this year while also entering the 37% tax bracket for the first time. Maybe I should have gifted my house to my parents instead!
@@TedErhartCFP Thanks. But as a single person, I can only claim a $250K exemption on the gains from selling my house. I now have to pay 20% on everything above that, which is going to be tens of thousands. Is there anything I can do in the next 3 days (end of 2024) to mitigate this looming disaster? Between base salary, bonus (paid as RSU), RSUs, investment gains and the house sale, I think I might be close to $1.5 million for the year (which is an extreme outlier for me personally). I've maxed out my 401(k) already. I guess I'm screwed.
Thank you very much!! This is a great video, very easy to understand. I use on-line tax forms. I'm guessing they take all the particulars into calculation, as long as I enter correctly?
Check out the related video 👉 How capital gains affect taxes on Social Security: ua-cam.com/video/X2K9E4tKrfQ/v-deo.htmlsi=Ay9Rg0TlJ79eqVTC
Thank you, my mother a recent widow was surprised on her tax bill, and I can understand why now, in addition to the standard deductions.. She has an accountant who does her taxes, so she is paying the correct amount, just that her bill was a surprise.
You're a great teacher! I will be subject to Capital Gains soon and it's good to know exactly how they work. Will help me to calculate how much I can SELL. I'm also a retiree, so I need to keep Social Security and IRMAA in mind. At least if I seek out a TAX professional I'll be somewhat informed. Thank you!
Glad it was helpful!
Agree, great video. My remaining question (and something I haven’t googled!) is for large sales of stocks, should I be doing an estimated tax to the IRS at time of sale? (I have never sold meaningful $ after tax)
@@TravlinmoAs you earn income in your taxable accounts, the IRS wants your tax money.
@@Travlinmo - depending on your broker, they can take the tax out for you and save you the hassle of filing quarterly estimated taxes.
Add me to the list of people saying that this is the clearest explanation on UA-cam! Presenting ordinary income and capital gains side-by-side made it easy to follow. I also appreciated the detailed presentation of how the long-term capital gains stack on top of ordinary income.
Actually, both qualified dividends and long-term capital gains stack on top of ordinary income, but I recognize that you might confuse part of your audience by trying to clarify that.
My only disappointment was noticing that only 4,700 people viewed the video. You deserve a much wider audience! Liked and subscribed.
Really glad it was helpful and I appreciate the nice comment! 😀
I really needed this video since I am starting my own financial education into investments. Clarified my confusion nicely
The two graphics showing how ordinary is first and LT gain is ON TOP OF ordinary combined with the LT floor and blended rates are golden! It's very tedious to go through that on my turbotax worksheet. Thanks for explaining this is the perfect level of detail.
@@mikeymike202totally agree with Bill 7360…what ever number!
I am impressed with your update, I am looking for tax efficient way to rebalance my 7-figure dividend portfolio without triggering capital gain tax. what asset allocation strategies should i use?
The best strategy depends on your financial situation, account types, tax bracket, and investment goals. Consult an advisor or tax professional to tailor these strategies for maximum tax efficiency.
I’m currently working towards financial freedom with a focus on dividends & growth investing. Since 2014, I’ve built a portfolio made up of 30% NVDA, 25% SCHD and over 40% in digital and alternative assets, thanks to my CFA. This strategy has helped me earn 56,000 a year in dividends. Back in 2014, I only earned $21 in dividends.
@@PatrickLloyd- Oh I've heard similar things about hiring an advisor. It's hard to choose one that's very good though. Could you make some useful recommendations?
I've stuck with SOPHIE LYNN CARRABUS since the pandemic, and her performance has been consistently impressive. She’s quite known in her field with over two decades of experience, simply look her up.
Thanks a lot for this suggestion. I needed this myself, I looked her up, and I have sent her an email. I hope she gets back to me soon.
The best explanation I found on YT. Thanks! I just subscribed.
By far the best explanation of this I have ever seen!
Thanks! Glad it was helpful.
I thought I understood income, standard deduction, LT capital gains calculations well.
I was close, but missed a few key points.
Thanks, very helpful.
Best explanation I’ve seen on how LT Capital gains are taxed. Thanks!
Awesome. Thanks!
Best video by putting the two tax rates side by side and explain how they work! Thank you for the clarity!
You're right it is technical, but you did a great job simplifying it. Top notch presentation, Ted!
I appreciate that!
THANK YOU. Been trying to figure this out for 5 years, accountant could not explain it, YOU DID ! Thank you.
Being a great TEACHER is completely separate from being a financial expert. I finally understand this clearly! Your charts are the best on YT. Stellar work.
I actually recreated the 1040 including that line 16 worksheet in Excel to figure out how my capital gains and regular income is taxed - I reverse engineered it - and figured out much of what you presented here, but your explanation still clarified a lot. Thanks!
We’re still in our 50s, and my strategy is to realize as much capital gains as I can each year, while remaining in that 0% bucket.
Terrific explanations. I’ve been good at tax PREPARATION, but am just recently learning the value of tax PLANNING.
Ted, you have a real gift for teaching. That was the clearest, most concise explanation I've ever seen on this topic.
@@intervibist Wow, thanks! Really appreciate it!
Ditto everyone else! This was a clear concise explanation of this topic, which I've never quite understood (what with using Turbo Tax, which doesn't really explain anything it's doing.) But within 10 minutes you explained this in a way that was easy to understand and to remember.
This was the best discussion of this topic that I've seen (and I've watched and read about this extensively). Thank you so much!
THANK YOU! This is exactly the questions and answers I need. I have been harvesting LT cap losses so long that now I only have a few years to harvest gains before pension, SS, and RMDs kick in and raise my bracket.
Very good. I was wrong in thinking that the capital gains were taxed differently until he explained it clearly with his illustrations. Now I understand. Thank you for sharing.
very good explanation, especially the stacking graph. I have heard of this, but never truly understood it, this was really helpful. Thank you!
Best explanation of taxable incomes for salary and capital gains. You convinced me to hit that subscribed button.
I have had many "Experts" explain this and it was clear as mud. Your explanation and Charts are Super Clear and to the point Thanks Great Job.
Glad it was helpful!
Awesome video ... short and sweet. I am looking forward to see more video relate to Capital gains and IRMMA tax. Thanks
ua-cam.com/video/Ai4AKkHbyTA/v-deo.html. Mr. Erhart also points out that tax-exempt income is included in the IRMAA surcharge.
The way you explained this and your charts made it very clear and understandable. An IRMAA threshold would be even better.
Excellent presentation! The charts helped me finally to understand how capital gains get stacked on top of ordinary income...after 40 some years of filing taxes! Thanks!
I agree. 👍
Very helpful… thanks. And here I was excited that the first 90K of gains wasn’t taxable, but you need 0 ordinary income for that to be true. :(
Don't forget about your standard deduction. Basically as long as your other sources of income are equal to, or below your standard deduction (or itemized deductions), you can maximize the 0% long-term capital gain bracket. I've got another video in the works on this.
Super helpful, planning on retiring at 52 using my RSUs to fund my retirement until I can draw from 401k. I had some holes in my understanding of how the LT capital gains was taxed and your charts and explanation filled those holes. Thanks!
I’ve watched a lot of UA-cam videos on this subject, and this is the best explanation that I have seen. Thank you.
This is the best video that I have seen explaining the correlation between ordinary income/capital gains and how they influence each👍👍 Very nice and educational! Going to share it with my friends.😊
Glad it was helpful!
That’s the best explanation so far among those l have watched on UA-cam, one of your standing out from others is your neat figures/examples. Great job Ted
Great video! Amazing teacher! Can you please do another example adding dividend income? Thank you!
Im in my 40s, not even retired yet, and this is one of the best videos ive seen explaining this stuff.
Awesome! Glad it was helpful.
7:36 awesome visualization and very clear. Thank you
Ted - First time I caught one of your videos. Well done laying out the camptal gains brackets. I was able to jetason some stock options over the years at 0% when I retired at 60 ten yerears ago. Frankly - I educated myself and qualified for the 0% bracket keeping my totals under the IRMAA threshold. Again - excellent presentation!
Awesome! Glad the video was helful. 😀
Thanks - that was very helpful. The examples with charts helped tremendously. Previously could not understand what others meant by gains being "stacked on top". Would really appreciate it if you would do another similar episode on qualified, non-qualified dividends, and interest income and its effect on tax brackets. I think I know the answer from watching this, but confirmation would really be helpful. Thanks very much for your efforts.
Thankyou! For explaining this so clearly. Ive been going in circles trying to get a clear answer from google sources on this.
I watched LOTS of videos about this subject and always came away feeling I was missing something. This was the first video that cleared up a lot of my questions & concerns about this subject. Thank you so much for your time & effort…I now understand 👍
Qualified dividends also fall into that ”Capitol Gains” bracket bucket as well…right?
Thanks for the info! Taking on the CFP in 2025 and your channel has some great simplified content for me to go over. Appreciate your time and effort!
Great video. Subscribed. No fluff just great content. Seeing the stacking and ordering visually makes it so much easier to understand. Thank you!
Most useful information relevant to my life I found on UA-cam. The way you explained cannot be any better. My respectful sincere thanks.
Thank you! This is the first explanation that actually makes sense. That tax rate stacking visual really helped!
You did an Amazing job of explaining taxation and the different income buckets. Because of your clear explanation I am going to change my 3 different accounts around to take advantage of the taxes (asset location). Thank you for your expertise.
i have explained this to my wife every time i do a quarterly estimated tax payment but your nice side by side chart hopefully makes it easy for her to understand. in early retirement my "income" subject to marignal rates is only from roth conversions and we live off liquidations from my taxable brokerage. i was planning on buying some rectangular magnets of different colors to use on a whiteboard along with the different tax brackets to show how the income stacking is in our particular situtaion.
If you don’t ever make another video you’ve still gained a new subscriber. Great explanation.
Awesome, thank you!
Good explanation and nice to see someone actually show the capitol gains and qualified dividends worksheet.
Very well presented. Concise and clear. Thank you
Hands down best video I have ever watched explaining these numbers. I'm a fan! Thank you Sir!
Wow, thanks!
Outstanding presentation… the best example I have seen yet on UA-cam.
Finally, someone clarifies this for me. Thank you so much!! Subscribed!
Excellent presentation. Clarity is great, especially for us older folks already retired and on Medicaid.
Glad it was helpful!
Very well done. This is going to help me next year. I plan to sell stock with a zero cost basis and my plan is to be in the 0% cap gains rate range.
8:15 : Tip : Send this tax worksheet with your tax form! The IRS sent me a mail audit b/c it was (wrongly) about to tax my capital gains as ORDINARY INCOME, which is taxed at a higher rate!
Anyone who says that if you fill out your taxes correctly, you have nothing to fear from the IRS is completely WRONG.
Super informative and concise with great real world examples. Thank you
Thank you for the very clear explanation. I've been adding to my mutual fund positions for 20+ years, but have never sold until this week. Now I have a better idea of what to expect when I filed my tax return next April.
Thanks. One of the best explanations with pictorials, almost anyone can understand the way you put it all together. You should become teacher, you got the skill.
Great contents!! Thank you for delivering the point easily. It looks quite basic but I didn’t have a good insight before.
It would be great to compare the amount of tax on $150k of normal income vs. $50k of normal income and $100k of long term capital gains. I imagine the one with capital gains is much less.
The "ordering rules" convention is one of the most confusing, convoluted and non-intuitive in all the tax code. This is a great explanation of what's going on. Thank you! By the way, it's just another way Congress "means-tests" your tax bill.
Finally, the clearest explanation of the interplay between ordinary income and capital gains. Thank you 🙏. Closing with an enhanced example showing both income and capital gains straddling brackets was super helpful.
Great job explaining this. I'm getting ready to retire in five years and believe tax planning is just as important as investing.
I would agree. With investing, chance plays a major role. By contrast, retirees can often be very strategic with the amount of income that hits their tax return.
Really clear!
You made that perfectly clear.
Best video showing capital gains breakdown
Just subscribed! It was not only just clear, but was well story boarded!!
Thanks for video. Would love to see a similar one on short term capital gains
Short term gains are all taxed as ordinary income up thru your brackets. It can get brutal if you are really "lucky".
Best explaination I've seen on the subject of how earned income and interest can reduce the "zero bracket" on dividends and LTCG. I stumbled on this while looking at other tax situations.
Another topic worthy of explaination is the "Inflation Reduction Act" limiting Health Insurance premiums to 8.5% of ALL income. A good strategy is to minimize or postpone income through 2025 since 8.5% on top of State and Federal taxes is a pretty heavy hit. Here in CA my upper bracket is 9.3%, 12%(Fed),8.5%(APTC) totaling 31%. The same income for 2026 would be only 22.5%.
Best video!! Clear explanation thank you so much. Subscribe immediately
How is LTCG affected with SS income?
Great information, thank you for all the graphs to break down the tax rates.
Thank you so much, the bar charts made it so clear. I just subscribed.
This IS the explanation I’ve been looking for!! THANK YOU!
Nice presentation 👍👍
Excellent video, you made the complex stuff so simple ❤
Very helpful video - thank you for addressing this confusing topic with such clarity
This was very helpful, thanks Ted. I plan to liquidate securities to buy retirement real estate, and will take considerable capital gains in the process. Now I know how to roughly estimate the tax impact. Liked and subscribed.
Glad it was helpful!
Thank you for the clear explanations, this is the best explanations I've ever seen for this confusing but important tax topic for everyone.
Glad it was helpful!
All of your information is VERY HELPFUL !!!! Thank you!!!!
Excellent and clear explanation! Thank you so much.
You made that so easy to comprehend. Thank you.
Well explained. Just keep it simple to get your point across.
Very good explanation of the topic and presented clearly!
This is the easiest to understand explanation i have seen. Thank you
This was very helpful. It answered my key questions very directly.
Excellent review of a complex topic
Great explanation for simple capital gains - what about selling primary residence - how is the tax on the gain applied - is there not a capital gains credit of $250K per husband and also wife? How does that work with your example... Thanks!
Very well explained! Love the viz aids. 👍
Great video!
Thank you for the instruction!
At age 62, I finally understand how capital gains are taxes with normal income. Thanks...
Great explanation! Just discovered your channel. Looking forward to watching your other videos.
Great graphics. You stayed on point. I was attentive. I subscribed. Thank you.
This was very concise and very clear. Thanks for allowing me to understand how badly I will be screwed at tax time next year. I sold my house this year while also entering the 37% tax bracket for the first time. Maybe I should have gifted my house to my parents instead!
If the house was your primary residence, you should be eligible for the home sale exclusion: www.irs.gov/taxtopics/tc701
@@TedErhartCFP Thanks. But as a single person, I can only claim a $250K exemption on the gains from selling my house. I now have to pay 20% on everything above that, which is going to be tens of thousands. Is there anything I can do in the next 3 days (end of 2024) to mitigate this looming disaster? Between base salary, bonus (paid as RSU), RSUs, investment gains and the house sale, I think I might be close to $1.5 million for the year (which is an extreme outlier for me personally). I've maxed out my 401(k) already. I guess I'm screwed.
Nice video. Finally I get the concept. Thanks
This is great stuff! I have been looking for this exact explanation. 🎉
Truly an excellent educational video. Thank you Sir. More than earned a thumbs up and a subscription.
Thank you very much!! This is a great video, very easy to understand. I use on-line tax forms. I'm guessing they take all the particulars into calculation, as long as I enter correctly?
Nice job. 😊
Nice job! Thank you!
Thank you. This chart/graph is really, really helpful.
Really great explanation that makes everything crystal clear.
Awesome! Glad it was helpful.
Fantastic explanation! Thank you for helping me understand this better.