How does a 0% tax rate sound? Pretty great, right? Unfortunately, most people don’t qualify for it. But some lower-income taxpayers qualify for a 0% long-term capital gains rate if their taxable income keeps them within the 10% or 12% ordinary-income brackets. If you have adult children in one of these tax brackets, you might consider transferring appreciated or dividend-producing securities to them. They may be able to sell the assets and pay no federal tax on the gain as long as their income stays within the 0% threshold. Just make sure they won’t be subject to the “kiddie” tax if they’ll be under age 24 on December 31. For more ideas on minimizing tax on investment gains, contact us.
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