The IRS has never collected more income tax from U.S. taxpayers than it has over the past 2 years1. It comes as no surprise that people are looking for ways to minimize or even eliminate (legally) the capital gains tax they pay each year. Can it be done? Yes, there many planning opportunities to achieve this, but one commonly forgotten tool is the 0% long-term capital gains rate. While most investors focus on harvesting investment losses each year, this strategy focuses on harvesting gains instead.
First, let’s review short-term vs long-term capital gains, then I’ll discuss how to sell appreciated assets without paying federal income tax.
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Capital Advantage Financial Advisor, Jeff Giguere, CFP®, recently got engaged to Cassidy Booe while vacationing at West Hill Lake in Connecticut! We wish them all the best.
The rules for withdrawing funds from an inherited IRA have changed…and can be confusing.
Per the 2020 SECURE Act, for IRAs inherited after 2019, the IRS now requires that new inheritors (who aren’t spouses or minor children of the deceased) withdraw the entire balance of the account within 10 years (previous rules allowed inheritors to stretch out withdrawals over their expected lifetime). These new rules apply to both traditional IRAs and Roth IRAs. Failure to distribute the IRA on time results in a whopping penalty of 50% of the amount that was supposed to be withdrawn.
The IRS recently clarified in a rule revision that inheritors are not required to take an annual required minimum distribution (RMD) during the 10 years. The revision allows for flexibility in approaches to withdrawing the funds which include withdrawing the full amount in the first year, or even waiting until the 10th year…giving the assets more time, potentially, to grow.