Can Long-Term Capital Gains Push You Into a Higher Ordinary Income Tax Bracket?

Learn how long-term capital gains affect your ordinary income and vice versa. You can see a real world example of how your long-term capital gains are taxed in the 0% and 15% tax bracket, as well as your ordinary income.

0:00 Introduction
0:14 Defining Ordinary Income
0:24 Short-Term Capital Gains
0:40 Long-Term Capital Gains
1:20 Science Experiment to Help You Remember the Difference Between Ordinary Income and Long-Term Capital Gains
2:58 Long-Term Capital Gains Can't Push You Into a Higher Ordinary Income Tax Bracket
3:26 Chart of How Ordinary Income Affects Long-Term Capital Gains
3:44 Real-World Example of Ordinary Income and Long-Term Capital Gains
5:31 Wrap Up Summary

#retirement #retirementplanning #taxplanning

[Bondbeer]

Good video. There actually is a unique situation where the timing of the cap gains can increase both ordinary income and dividend income. Example 1 married filing jointly $97k income after deductions all wages less $3k cap loss you are in the 12% bracket married filing jointly. Now you take a capital gain which will be offset by the cap loss and you are in the 22% ordinary income bracket. Example 2 $97k income of which $3k are qualified dividends and a $3k cap loss. You will pay tax on $91k of ordinary income and zero on dividends as under the threshold. Now take a $3k cap gain offset by the loss so no cap gains tax but you will pay 12% on an additional $3k of ordinary income plus your dividends are now taxable at 15% for a total of 27% tax due to taking that cap gain.