Tax Tip #170

Did you know that for federal purposes, the gain from a sale of a security held long-term (over one year) may not be taxed if all the stars align? 

If taxable income — excluding long-term gains or dividends — doesn’t exceed $44,625 (Single), $59,750 (Head Of Household), or $89,250 (Married Filing Jointly), the federal tax rate on qualified dividends and/or profits from the sale of assets held for the long term remains at 0% until these threshold amounts are exceeded.

Potential pitfalls: This tax strategy may lead to an increase in the taxation of social security benefits and as well as state income tax.