How capital gains affect taxes on Social Security

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Күн бұрын

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@TedErhartCFP 3 ай бұрын

👉For a broader discussion about HOW CAPITAL GAINS AFFECT YOUR TAX RATE, check out this video: kzbin.info/www/bejne/rnysY4irm6d_q6ssi=cYcQAgkij0bpv-0U

@wilg.2594 2 ай бұрын

This was a great video. Your explanation was concise and easy to understand.

@bobathedog 2 ай бұрын

Thank you for explaining this! I’m a teacher and will be getting a pension at retirement, along with taking income from a 457b. If you are able, a video explaining this type of situation would be helpful for all public workers ❤

@kansaidan2302 3 ай бұрын

Another 'trap' retirees should be aware of ............................................... THANKS!

@paulholt2317 25 күн бұрын

In a previous video, it was established that capital gains do not affect taxation on regular income. But it appears there is an exception when it comes to Social Security income?

@幸せな世界 3 ай бұрын

Great job. Thank you.

@mamaahu 22 күн бұрын

I am trying to figure out how much capital gains I can accrue before getting taxed. (And also to decide whether it may be worth it anyway, to get rid of poor performers.) Your videos are so clear and helpful. I am so grateful for all the work you have put into this beautiful service to us! I saw a video that you did last year that uses bar charts to clearly describe how capital gains is taxed after ordinary income. It was so powerful in helping me graphically see what happens to taxes on ordinary income and when capital gains jumps in. Is it possible to do something like that on this subject? (You may be finished with this for this year, I understand. And I really appreciate that this content is free too! Thank you.) As I write this , I realize that probably, the interplays are too complex to be illustrated in the kind of chart I am thinking of, which is why you created the worksheet. Is that right?

@learning.finances 3 ай бұрын

I really like your examples. Thanks for sharing the combined Social Security Benefits Chart. I have seen this chart or something similar in the past and used it in helping me decide whether to take social security at 62 vs 70 in regards to taxes. For example, lets pretend I plan to spend $60,000 per year. I could either take SS at 62 and get about $20,000 per year and withdraw the remaining $40,000 from my pretax IRA. Based on your chart, 56% of my ss would be taxable. However, if I wait to take ss at 70 and assume about $40,000 per year from SS and withdrawing only $20,000 from my pretax accounts, only 10% of my social security benefits would be taxable. Is this correct? If yes, then it may be another reason to wait to take ss at 70 and to start withdrawing from pre-tax accounts at 62.

@TedErhartCFP 3 ай бұрын

You are reading the chart correctly and bring up an interesting point...that being, Social Security is taxed more favorably than other types of income. In other words, if I had to choose between $40k of Social Security benefits, $40k of IRA distributions, $40k of interest income or $40k from a pension, I'd prefer Social Security especially if my gross income was very low. As you can see in the table, there are scenarios where $40k of Social Security benefits would be completely tax free. It all has to do with the way the calculation for how much Social Security is taxable is done. It's an obscure construct and I was thinking about this as the subject of one of my next videos.

@learning.finances Ай бұрын

@@TedErhartCFP Thanks for the reply. What software do you use to run these analyses? I am looking for a free or very inexpensive software.

@nraghu99 3 ай бұрын

For some one retired in 2024 is it better to convert 123k (94 + 29) pre tax IRA to Roth or to convert 65k (94 - 29) to Roth and do tax gain harvesting of 29k from a brokerage account this person is married filing jointly and has 29 k standard deduction and has money in checking account to meet expenses

@tonyc2227 3 ай бұрын

what if you are forced to take a distribution from the RMD? does that forces you to get taxed on the social security income?

@kuanwenhuang8071 2 ай бұрын

RMD from qualified plans (traditional 401k and IRA) are taxed at ordinary income tax rates. In the event where the RMD is substantial (e.g., for an 80-year-old with $1M nest egg), there's a good chance the social security retirement income WILL be (heavily) taxed.

@chancesalcedo7284 2 ай бұрын

If instead of selling a long term capital gain , would it be advisable to take a margin loan instead ?

@ronaldrutledge1243 3 ай бұрын

Hi, are those long term capital gains thresholds the same for the state of Idaho or is there a 5.8% tax on income starting at $8978 when married filing jointly? I’m just curious if my google search was accurate or does every state use the same chart you provide in this video? Thanks for your time.

@TedErhartCFP 3 ай бұрын

The tax tables are ONLY in reference to federal income taxes. Each state has its own tax laws which adds on another layer of complexity.

@troymills9437 3 ай бұрын

Think you may have misspoken. It is the $51,000 of SS benefits that actually is being taxed, not the $90,000 in capital gains or the $111,800 in taxable income, correct? Is there a worksheet behind the 1040 that shows the actual calculations?

@TedErhartCFP 3 ай бұрын

I could have gone deeper on this point but it's a bit complicated. What's getting taxed is $21,800 of the SS benefits ($51k minus the standard deduction). Also, $17,750 of the capital gain (this is the piece of the capital gain that exceeds the $94,050 threshold). You'd find this on the qualified dividends and capital gain tax worksheet.

@troymills9437 3 ай бұрын

@@TedErhartCFP Thanks!

@turtle522 3 ай бұрын

You might look at IRS Publication 915 (2023).

@maneugeni 3 ай бұрын

@@TedErhartCFPYes, you should have added the worksheet so we understand how SS is taxed in conjunction with the Capital Gains rate. I am assuming SS is being taxed as ordinary income (which is ridiculous, given we have paid taxes our whole life to save for this SS pension)? And is the capital gain portion paid at the capital gain tax rate?

@mamaahu 22 күн бұрын

@@maneugeni Don't forget that you are not paying for this content. He might have added the information you are asking for, but "Should"? Not at all. He owes us nothing. But if you are just asking for something that you would like...

@adabamas 3 ай бұрын

I feel like you didn't go far enough in that last example. With that taxable income, after the standard deduction, what taxes will they pay? I'm confused.

@charlielipthratt7291 Ай бұрын

The bottom of his tax form example shows the tax is $4,846.

@pirateofpacific 3 ай бұрын

What about short term capital gains?

@TedErhartCFP 3 ай бұрын

Basically any non-Social Security income (if you have enough) will affect how Social Security is taxed.

@positivityplace 2 ай бұрын

I am single, only made $1900 in capitol gains by selling some stocks and under $20,000 in SS....so do I still file taxes?

@mamaahu 22 күн бұрын

File but you wont have to pay any taxes.

@MICHAELCARACAPPAJR 3 ай бұрын

Does tax free income from municipal bonds affect any of these numbers? Such as cap gains or SS becoming taxable.

@charlielipthratt7291 6 күн бұрын

Tax exempt income like municipal bonds are added to the AGI and other items to help calculate what amount of your social security benefit is taxable.

@agueda-aggie-balderrama8893 Ай бұрын

My parents are thinking of selling real property that would bring in $130k in capital gains. Does it only affect them the year of the sale of the property?

@TedErhartCFP Ай бұрын

This is a great question and it actually gave me an idea for my next video! Unfortunately the answer is it depends. The tax on Social Security will only be impacted the year of the sale. But the other factors that matter are whether they are on Medicare and their other sources of income. They could get hit with a Medicare surcharge two years in the future.

@agueda-aggie-balderrama8893 29 күн бұрын

@ Thanks for your video! Looked into the surcharge and that’s precisely what I was concerned about. Looks like they may not be impacted after all. I’m going to crunch some numbers to make sure.

@lindsaynewell6319 25 күн бұрын

@@agueda-aggie-balderrama8893 be sure to factor in the exclusion (if it was their primary home) and any improvements that they made (and can verify if audited).