14 THE QUEENS COURIER • JANUARY 25, 2018 FOR BREAKING NEWS VISIT WWW.QNS.COM
Pay Zero Tax on Capital Gains
BY JOHN SAVIGNANO, CPA
That’s not a misprint. You can qualify for a 0%
tax rate on some or all of your long-term capital
gains realized in 2017.
Strategy: Figure out how much capital gain
you might fit under the threshold. The 0% rate
applies to taxpayers who end up in the 10% or
15% regular income tax brackets.
For instance, you may qualify for preferential
tax treatment if your business incurs a loss or you
defer a substantial amount of income to future
years. Alternatively, you might shift some of your
capital gain assets to your children or grandchildren
who are eligible for the 0% tax rate.
Single filers with taxable income above
$416,700 and joint filers above $470,700 face a
maximum 20% rate for 2017.
If your income drops below the cutoff point,
you can benefit from the 0% rate. For 2017,
the threshold is $27,950 for single filers and
$75,900 for joint filers.
Note that it doesn’t have to be an all-ornothing
proposition. For instance, say that
your taxable income before counting capital
gains is $55,900 instead of $20,000. In that
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41-18 CRESCENT ST,
LONG ISLAND CITY, NY 11101 | 718-707-0295
47-46 VERNON BLVD, SECOND FLOOR,
LONG ISLAND CITY, NY 11101 | 718-707-0295
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case $20,000 of the gain from the sale of stock
($75,900 - $55,900) qualifies for the 0% rate.
The remaining $30,000 of gain is taxed at the
15% rate, for a total of $4,500.
If you have no shot at the 0% rate this year, shift
appreciated capital gain assets like stocks and
mutual fund shares to low-taxed family members.
The transfers can be sheltered from gift tax by
the annual gift tax exclusion of up to $14,000 per
recipient ($28,000 for joint gifts made by a married
couple). Any excess is covered by your annual
lifetime gift-tax exemption ($5.49 million in 2017)
However, under the “kiddie tax” investment
income above $2,100 received in 2017 by
dependent children up to age 24 can be taxed
at the parents’ top rate. Also, shifting too much
income might affect college aid eligibility.
The 0% capital gains rate only applies to assets
held longer than one year. Short-term gains are
taxed at ordinary income rates.
John Savignano is a partner with Savignano
Accountants & Advisors located at 47-46 Vernon
Blvd., Second Floor, in Long Island City. If you have
any questions or require additional information,
please call John at 718-707-0955.
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