Joe Marullo Insurance & Retirement Services
16818 Doverwood Way
Houston, Texas 77058
Did you know the tax law changed on Capital Gains? Do you know how important it is to understand the short-term and long-term tax brackets? Knowing the difference and how to use them when investing and tax harvesting can make a huge difference in your tax liability.
It is essential to know long-term capital gains tax brackets and understand short-term tax liability entirely. The benefit of one to the other can make a world of difference to your overall tax liability. Understanding this section of the Internal Revenue Tax Code may help you save thousands of tax liability dollars. Avoiding that liability may be reallocated with reduced or even total elimination of income tax liability.
The law is unambiguous:
If your taxable income is less than $78,750, your long-term capital gains tax rate is zero.
If your taxable income is between $78,751 and $488,850, your long-term capital gains tax rate is 15 percent.
If your taxable income is over $488,850, your long-term capital gains tax rate is 20 percent.
To qualify for long-term capital gains, you must hold ownership of your investment for longer than 12 months. Other markets included in the long-term capital gains tax liability could be real estate, commodities of all kinds, including gold, silver, oil, copper, etc. Also included in this asset class could be digital currencies such as bitcoin and possibly qualified dividends. All may qualify as long-term capital gains if held for twelve months or longer. (see disclaimer below) If any of these assets are held for a shorter time than twelve months when sold, their gain could be treated as ordinary income, and the gain is taxed according to the regular tables used to tax ordinary income.
Why is this information important now, especially with a pretty severe stock market crash expected in the near future? What’s the purpose of investing in the stock market “buy low and sell high?”
Where is the stock market valuation now?
Wouldn’t it make sense to lock in some of the gains you have enjoyed in the last bull market and protect the asset in vehicles with no market risk, such as a fixed index annuity? A fixed indexed annuity helps safeguard against stock market loss and allows you to participate in a portion of the market’s upside without any risk to your money. Plus, defer the taxes until you need income. More about fixed index annuities: https://annuity.com/fixed-indexed-annuities-fact-or-fiction/
Disclaimer: This article is for information only and never intended as tax or investment advice. Tax code and tax liability can be complicated, and you should refrain from any final decision based on this article.
Please consult a licensed and authorized professional before making any decision.
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