Paying 0% Tax On Capital Gains And Dividends

Smart Money (via Ritholtz):

Some Examples

Example 1: Married Joint Filer.

You're a married joint filer with two dependent children and show the following on your 2012 Form 1040.

• $110,000 salary.
• $11,000 of 401(k) contributions at work.
• $20,000 of itemized deductions for mortgage interest, state and local taxes, charitable contributions and so forth.
• $15,200 write-off for four personal exemptions ($3,800 each).

Your 2012 taxable income is $63,800 ($110,000 minus $11,000, minus $20,000, minus $15,200). You have $6,900 of "room" left within the 15% bracket ($70,700 ceiling for 15% bracket minus your $63,800 of taxable income). That means you could have up to $6,900 of long-term gains and dividends that would be taxed at the 0% federal rate. Any additional 2012 long-term gains or dividends would be taxed at the maximum federal rate of 15% (still pretty good).

Example 2: Single Filer.

You're unmarried with no kids and show the following on your 2012 Form 1040.

• $45,000 salary.
• $4,500 of 401(k) contributions at work.
• $5,950 standard deduction.
• $3,800 personal exemption deduction.

Your 2012 taxable income is $30,750 ($45,000 minus $4,500, minus $5,950, minus $3,800). You have $4,600 of "room" left within the 15% bracket ($35,350 ceiling for 15% bracket minus your $30,750 of taxable income). That means you could have up to $4,600 of long-term gains and dividends that would be taxed at the 0% federal rate. Any additional long-term gains or dividends would be taxed at the maximum 15% rate.

I've actually qualified for zero percent tax on some of my dividend income, because all of my deductions went against my earned income.  So even though I had income that would have been taxed at regular tax rates, once my charitable deductions were taken out, the first $35,350 was taxed at 0%.  Some schmuck going to a job everyday to get that $35,350 would have paid tax on that money.  Thank you George W. Bush for looking our for all us folks wealthy enough to get $35,350 in dividends.  Divide that by a utility stock's 5% dividend yield, an that would indicate the person had $707,000 invested.  You know, the struggling middle class.  Paul Ryan would make all dividend income and capital gains untaxed, even if the person was making, say $20 million a year, like his running mate.  Fucking jackasses.