# How to use the o percent long term gain tax rate?

**URL:** <https://discussion.fool.com/t/how-to-use-the-o-percent-long-term-gain-tax-rate/80315>\
**Category:** FIRE Wannabees\
**Created:** [November 11, 2022, 5:55pm UTC](https://discussion.fool.com/t/how-to-use-the-o-percent-long-term-gain-tax-rate/80315 "2022-11-11T17:55:16Z")\
**Posts on this page:** 4\
**Page:** 1

<div class="post-metadata">

**Author:** ![darrellquock](https://sea2.discourse-cdn.com/motleyfoolfree/user_avatar/discussion.fool.com/darrellquock/32/3293_2.png) [@darrellquock](https://discussion.fool.com/u/darrellquock)\
**Post date:** [November 11, 2022, 5:55pm UTC](https://discussion.fool.com/t/how-to-use-the-o-percent-long-term-gain-tax-rate/80315/1 "2022-11-11T17:55:16Z")

</div>

If both my wife and I are not working and not receiving income from SS or a pension, is it true that I can withdrawl from my taxable account up to $80,000 tax free?

What am I missing?

---

<div class="post-metadata">

**Author:** ![aj485](https://g.foolcdn.com/misc-assets/discourse-member-avatar_120px_bronze600.png) [@aj485](https://discussion.fool.com/u/aj485)\
**Post date:** [November 11, 2022, 11:51pm UTC](https://discussion.fool.com/t/how-to-use-the-o-percent-long-term-gain-tax-rate/80315/2 "2022-11-11T23:51:21Z")

</div>

> [@darrellquock](#):
>
> If both my wife and I are not working and not receiving income from SS or a pension, is it true that I can withdrawl from my taxable account up to $80,000 tax free?

It’s actually more than that, depending on any other income. Since you mention you and your wife, I’m going to assume you are MFJ. For 2022, the standard deduction for MFJ is $25,900, plus an additional $1,400 for each of you who is 65 or older. Then, the 0% capital gains bracket is up to $83,350. So for a MFJ couple, from $109,250 (for both under 65) to $112,250 (for both over 65) in capital gains and qualified dividends can be taxed at 0%

> [@darrellquock](#):
>
> What am I missing?

Well, any other income will be added to the bottom of your income stack to push the capital gains over that limit. For example, let’s say a couple, both under 65, has $110,000 in taxable long-term capital gains and/or qualified dividends. If they have NO OTHER INCOME, their total Federal tax bill would be 15% of ($110,000 - $109,250), or $750 \* 15% = $113

But, let’s say they do have some other income: $10k in interest from their money market accounts, plus $15k in short-term capital gains and/or non-qualified dividends. Their total income would be $10k + $15k + $110k = $135k In this case, the standard deduction would offset the $25k in ordinary income (interest, short term gains and non-qualified dividends) and offset another $900 in long-term capital gains. But $25,750 ($25k more than the previous example) would be taxable at 15%, so their total Federal tax bill would be $3,863

Additionally, let’s say that they did a Roth conversion of another $25k, in addition to the previously mentioned interest, STCG and non-qualified dividends. That gives them a total of $50k in ordinary income, plus the $110k of LTCG/qualified dividend income. Their Federal tax bill would be calculated as:

```auto
First $25,900 in ordinary income - offset by standard deduction $ 0
Remaining $24,100 in ordinary income - taxed at 12% $ 2,892
First $59,250 in LTCG/qualified dividends - taxed at 0% $ 0
Remaining $50,750 in LTCG/qualified dividends - taxed at 15% $ 7,613
Total $ 10,505

```

So, it’s not just SS and pension income that needs to be considered - it’s all income.

AJ

---

<div class="post-metadata">

**Author:** ![darrellquock](https://sea2.discourse-cdn.com/motleyfoolfree/user_avatar/discussion.fool.com/darrellquock/32/3293_2.png) [@darrellquock](https://discussion.fool.com/u/darrellquock)\
**Post date:** [November 12, 2022, 3:30am UTC](https://discussion.fool.com/t/how-to-use-the-o-percent-long-term-gain-tax-rate/80315/3 "2022-11-12T03:30:16Z")

</div>

Thanks AJ,

Paints a clearer picture.

Too bad my pension @55 ($75,000) will count as ordinary income and not leave much room to wiggle…lol

---

<div class="post-metadata">

**Author:** ![aj485](https://g.foolcdn.com/misc-assets/discourse-member-avatar_120px_bronze600.png) [@aj485](https://discussion.fool.com/u/aj485)\
**Post date:** [November 12, 2022, 4:07pm UTC](https://discussion.fool.com/t/how-to-use-the-o-percent-long-term-gain-tax-rate/80315/4 "2022-11-12T16:07:48Z")

</div>

> [@darrellquock](#):
>
> Too bad my pension @55 ($75,000) will count as ordinary income and not leave much room to wiggle…lol

If you have room to wiggle before you start collecting your pension, you could sell and re-buy to reset the basis in some of your larger gainers. There’s no time limit on gains like the wash sale rules impose on losers.

AJ