The capital gains tax calculator is a calculator that aids you in estimating the net proceeds from sales of your asset and your capital gains tax. This is updated in order to reflect the changes in several tax rates and Medicare taxes. In such situation, it is better to consult your tax attorney and CPA if you require more clarification. Harvesting capital gains is a procedure of deliberately selling an investment that will generate a long-term gain in years. The gain of this sale is not taxed when it occurs in a year where you are in a zero percent capital gains tax bracket. So how really does zero percent tax work?

How does zero percent rate work?

The zero percentage tax rate on capital gains applies to people within the 15 percent marginal tax rate or below. This applies to married tax filers in 2017 with taxable income up to $75,900, and single tax filers with taxable income up to $37,950. Irrespective of the situation of your taxable income being normal or a bit higher, there are years when a lower income tax occurs.

Tax Opportunities
The most popular tax planning prospects happen if you are:

• Unemployed temporarily
• Between the age of 55 and 70 and with the tendency of retiring or already retired.
• A sales person that has income that varies from year to year.

For instance, you are married and your taxable income is $60, 000. You will have room for more income before hitting the 15 percent bracket. If you own a mutual fund or stock in a non-retirement account and some of them have unrealized long-term gains, you have a tax planning opportunity.

Checklist before starting harvesting gains

• Mutual funds normally distribute capital gains within the fall of the year. For some mutual funds, they distribute it at mid-December. If you are an owner of index funds or tax-managed fund, the gains are likely to be minimal. Mutual funds not managed with taxes in the mind can produce larger gains.
• Look out for your tax return if there is a capital loss, which is being forwarded to a previous year. Past losses are carried forward. Check your tax return to see if you have a capital loss that is being carried forward from a previous year.
• Make sure you have an accurate estimate of what your tax return will look like. Unless you are a finance person, I think it is best to work with a tax professional or financial advisor for these projections, but some enjoy running multiple scenarios through online tax preparation software to do their planning.

Benefits of Harvesting Gains for Retirees

Gain harvesting can be an effective way to get tax-free gains, but in order for it to work, you must build a habit of projecting taxes and looking for tax opportunities each fall. By doing this consistently, you can reduce your tax bill during your retirement years, which means more of your retirement income goes in your pocket.