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Mutual Funds ETF's Taxes Cliff

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waynezo
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Mutual Funds ETF's Taxes Cliff  Reply with quote  

My portfolio is with Trowe I will have 14k in LT cap gains ST cap gains and dividends(fund distributions). I've been off work this year and have only 6k unemployment compensation income. I understand that if Bush tax cuts are extended I will pay zero % on my LT cap gains (about 10k) as long as I remain in the 15% bracket.

I'm loking for advice on reducing my tax bill in the future possibly transferring taxable funds to ETF or index mutual fund.

Also I want to cash in one of my taxable funds and incur another 10k of LT cap gains at 0%. If I do that what are the chances we go off the cliff and the Bush tax cuts are not extended for anyone and I incur a 20% tax on LT cap gains.

Any opinion or advice will be greatly appreciated.
Post Wed Dec 26, 2012 12:06 pm
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oldguy
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IMO the longterm capital gains rate will go from 15%MAX to 20%MAX (or more) in 2013 whether or not we go off of the fiscal cliff. I think Congress will make that change sometime during 2013 and make it retroactive to Jan 1 (historically those types of tax code changes are retro). So if you have some profits that you want to take in the near future, it would probably be wise to do it by Dec 31. And in your special case (almost no taxable income in 2012) your rate will likely be less than the 15% maximum in 2012.
Post Wed Dec 26, 2012 5:03 pm
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waynezo
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Thanks for the reply. Is it true the 0% LT cap gains rate for the 15% bracket for tax year 2012 will be in effect regardless of what congress does about the cliff, that any changes will affect tax year 2013 and not be retro to 2012.

I think I misunderstood when I thought terms for 2012 were still up in the air.
Post Wed Dec 26, 2012 7:53 pm
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