Example: You are married, have 200K income and 200K long term cap gains.
Your "regular" combined income is taxed at 32%, but your longterm cap gains are taxed at 15%.
See the table in here:
https://erwealth.com/podcastblog/will-capital-gains-push-me-into-a-higher-tax-bracketCapital gains will not cause your ordinary income to be taxed at a higher rate..
So, again, long-term capital gains are taxed at different rates and separately from your ordinary income.
Unless i completely misunderstand their "slang" it appears that you could be taxed differently for reg income and for cap gains.
Correct. So your 80k 0% CG tax applies to 80k if you don't work a day all year, but for every day you work that 0% is replaced by the income tax rate. So the best option is to be a complete louse, live off your LTCG and pay zero taxes on the first 80k.
After that it's taxed at 15% up to a couple of hundred G (half million or so). That may seem a lot, but remember there is no Social Security "tax" nor is there any Medicare or employment taxes. So it's lower than you think. This is why it's good to be rich.
However you can't contribute to an IRA or 401k with CG money, you need to have income. Which leads to my real fun question:
If on Jan 1 you redirect 100% of your salary to a 401k, then quit once you hit $19500 (the 401k limits), do you still get the whole 80k CG at 0% rate because the 401k was a "top line" (before AGI) deduction or is it based on total income?
Is health insurance paid for by CG profits deductible? Since Health insurance is another top line deduction can you work an extra few weeks for that money and still get the 80k 0% CG tax rate?
Inquiring minds want to know. :-)