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Beth A. Botti, CFP®, ChFC, CLU, CDFA™
Financial Consultant
California Insurance License #0G24537
612 Wheelers Farms Road, Milford, CT 06460
Phone: 203-877-6556 Ext. 169
Fax: 203-301-0736
Email: beth.botti@equitable.com
September/October 2018
Tax Planning for Capital Gains
As we approach the last quarter of the year, tax-smart investors typically review their portfolios to determine which investments to hold and which ones to sell. When you conduct this exercise, you should understand a few basics about capital gains taxes.
Realize the Difference
You receive realized gains when selling a security for a profit. Unrealized gains are an increase in the value of securities you continue to hold — they are paper gains only. An example of the latter might be investments you maintain in a retirement plan’s mutual funds.*Next, know the difference between short-term and long-term capital gains. Securities you sell after owning them for one year or less will produce short-term capital gains, and you’ll pay taxes on those gains at your ordinary income tax rate. The highest bracket in 2018 tops out at 37%.
Favorable Tax Rate
Capital gains realized from investments held longer than a year and a day are taxed at the more favorable capital gains tax rate. This rate tops out at 20% for taxpayers filing jointly with an adjusted gross income over $479,000 and $425,800 for single taxpayers. In 2018, those in the 20% capital gains bracket will also pay an additional 3.8% tax related to the Affordable Care Act.For the majority of investors, whose annual income is lower, the capital gains rate is 15% for joint filers earning between $77,200 and $479,000 and single filers earning between $38,600 and $425,800. Taxpayers with adjusted gross incomes below these thresholds pay 0% on long-term capital gains.
Personal Decision
Whether you sell or hold your investments depends on your personal circumstances. Some investors may want to employ what’s known as tax-loss harvesting, which allows you to subtract investment losses of up to $3,000 from your taxable income. Consult a tax professional to make an appropriate decision for yourself.* You should consider the fund’s investment objectives, charges, expenses and risks carefully before you invest. The
fund’s prospectus, which can be obtained from your financial representative, contains this and other information about the fund. Read the prospectus carefully before you invest or send money. Shares, when redeemed, may be worth more or less than their original cost.
GE 2141123 (6/18)(Exp 6/20)
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Duly registered and licensed financial professionals offer securities through Equitable Advisors, LLC (NY, NY 212-314-4600), member FINRA,SIPC (Equitable Financial Advisors in MI & TN), offer investment advisory products and services through Equitable Advisors, LLC, an SEC-registered investment advisor, and offer annuity and insurance products through Equitable Network, LLC (Equitable Network Insurance Agency of Utah, LLC in UT; Equitable Network of Puerto Rico, Inc.). Equal Opportunity Employer - M/F/D/V. Equitable Advisors and its associates and affiliates do not provide tax, accounting, or legal advice or services. Representatives may transact business, which includes offering products and services and/or responding to inquiries, only in state(s) in which they are properly registered and/or licensed. Your connection to this website does not necessarily indicate that the sender is able to transact business in your state. The information in this website is not investment or securities advice and does not constitute an offer. For more information about Equitable Advisors, LLC you may visit https://equitable.com/crs to review the firm's Relationship Summary for Retail Investors and General Conflicts of Interest Disclosure.
GE-6572038.1 (4/24)(Exp. 4/26)
CFP®, and CERTIFIED FINANCIAL PLANNER™ are certification marks owned by the Certified Financial Planner Board of Standards, Inc. These marks are awarded to individuals who successfully complete the CFP Board's initial and ongoing certification requirements.
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