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Tuesday, October 31 2017

With the prospect of new lower individual tax rates on the horizon for 2018, the average taxpayer or business owner should generally accelerate deductions to 2017 and delay income until 2018. Often overlooked in the planning arena are the low capital gains rates experienced by many Americans.
 
                2017 Capital Gain Rates (01/2013 Tax Act)

 
If net capital gain is from:

Then maximum capital gains rate is:

Collectibles

28%*

Gain on Qualified Small Business Stock Equal to the Section 1202 Exclusion

28%*

Un-recaptured Section 1250 Gain

25%*

Rate when taxpayer is in 39.6% personal bracket

20%*

Other gain & qualified dividends when the regular tax rate is higher than 15%

15%*

Other gain & qualified dividends when the regular tax rate is 15% or lower (Single <$37,650, MFJ <$75,300 taxable after exemptions)

0%
 

 
When an individual is in the 15% or lower individual tax bracket in 2017, their capital gains rate is 0%, and if the capital gain is what causes their ordinary income tax bracket to go higher than 15%, only the excess capital gains are taxed at 15%.
 
With all of that in mind, in layman’s terms if an individual’s taxable income is less than the amounts below based on their filing status, their capital gains rate for 2017 is 0%.

                        Capital Gains Planning-2017 Amounts

 

Single

Married-Joint

Married Separate

Head of Household (+1 child)

Income at the top of the 15% bracket

 
$37,950

 
$75,900

 
$37,950

 
$50,800

Standard Deduction based on filing status

 
+6,350

 
+12,700

 
+6,350

 
+9,350

Personal exemptions based on filing status no children

 
 
+4,050

 
 
+8,100

 
 
+4,050

 
 
+8,100

Maximum taxable income (without itemizing) for 0% capital gains rate

 
 
=$48,350

 
 
=$96,700

 
 
=$48,350

 
 
=$68,250


                               Client Worksheet for Capital Gains Planning

Client Name:                                                                  Filing Status:                       2017

Filing status bracket limit

 

Filing status standard deduction

 

Additional Itemized deductions

 

# personal exemptions times $4,000

 

Maximum 0% capital gains taxable income limit

 

Less estimated taxable income

 

Equals amount of capital gains to recognize this year

 



  


Posted by: Shelli Dodson AT 07:58 am   |  Permalink   |  Email

    Dodson & Pope, CPA PLLC
    1095 Evergreen Circle, Suite 200, The Woodlands, TX 77380
    Phone: 936-443-0370   Email:
    Dodson & Pope

     

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