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517 | Maximize Your Wealth: Understanding Capital Gains Tax Strategies | With Cody Garrett
Oct 21, 2024
Cody Garrett, a Certified Financial Planner from Measure Twice Money, shares invaluable insights on capital gains tax strategies. He explains capital gains harvesting and how it can minimize tax liabilities on investments. The discussion covers the advantages of long-term capital gains versus ordinary income, and strategies for effective tax management during retirement. Cody also highlights the interplay between taxable income and health insurance subsidies, emphasizing smart planning for financial independence while prioritizing lifestyle choices.
51:27
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Quick takeaways
- Capital gains harvesting allows individuals to minimize tax liabilities by strategically timing the sale of investments for tax efficiency.
- Understanding the differences between capital gains and ordinary income is crucial for optimizing withdrawal strategies during retirement.
Deep dives
Understanding Capital Gains Taxation
Capital gains harvesting provides a distinct advantage in how capital gains are taxed compared to ordinary income. Ordinary income encompasses wages, self-employment revenue, and various retirement distributions, all taxed at progressive marginal rates. In contrast, long-term capital gains—including profits from profitable investments held over a year—are taxed preferentially at rates of 0%, 15%, or 20%. This favorable structure incentivizes investment for individuals and demonstrates the government's acknowledgment of the risks associated with stock market participation.
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