I might have missed it but just to be clear you are selling any new stock you get when you can, aren't you?
The first thing I would do would be to do a dummy tax return to see what the state and federal taxes would be if you sold it all at once and get some hard numbers instead of vague percents of this or that. It will not be exact but you can use last years tax software to get aproximante tax returns
I don't know what the actual numbers would be but if I assume that you have $200K of stock and overall have $100K in capital gains then you would pay 23.8% in federal taxes or $23,800.
If you wait until you retire and there are no tax law changes you would pay 15% or $15,000 in federal taxes and clear $185k and be happy with that.
That is only a difference of $8,800 or 4.4% of the current price.
To me that is not enough to delay selling the (theoretical) $200K in stock since it can easily drop that much in one day.
If you cannot bring yourself to sell it now then an alternative way to "trick" yourself into selling it would be to put a limit order to sell the stock at $208,800 which is 4.4% higher than the current price. If it goes up and gets sold at that price then you would still clear about $185k which should make you just as happy as if you held it until you retired and pay the 15% capital gains tax rate and cleared the same $185K.
Of course the stock may not go up another 4.4% anytime soon but at least that would give you a good chance of getting off the treadmill of never selling it.
That example ignores state taxes but you need to keep those in mind and rework your actual numbers with state taxes too.
Even if the company is sound and dependable if there is a major bear market and the S&P goes down sharply then the company will be impacted too so don't feel too safe.Ive held over the years because I generally felt comfortable about the trajectory of the company and also never felt as if there was a time that the stock was wildly "overvalued".
I had a hard time following the numbers and you also need to consider your state taxes.Well it is 23.8% I believe (20% plus 3.8% NIIT)If you are paying 15% LTCG, 25% gains is pretty small, you'll be left with over 95% of your total value on those shares. Don't LTCG drive your decision more than it really should because "taxes bad".
And that 25% gain tranche is about 10-15% of my overall holding in the stock. From there it gets higher and some of the holdings have 400% appreciation. That would be a lot of capital gains haha
The first thing I would do would be to do a dummy tax return to see what the state and federal taxes would be if you sold it all at once and get some hard numbers instead of vague percents of this or that. It will not be exact but you can use last years tax software to get aproximante tax returns
I don't know what the actual numbers would be but if I assume that you have $200K of stock and overall have $100K in capital gains then you would pay 23.8% in federal taxes or $23,800.
If you wait until you retire and there are no tax law changes you would pay 15% or $15,000 in federal taxes and clear $185k and be happy with that.
That is only a difference of $8,800 or 4.4% of the current price.
To me that is not enough to delay selling the (theoretical) $200K in stock since it can easily drop that much in one day.
If you cannot bring yourself to sell it now then an alternative way to "trick" yourself into selling it would be to put a limit order to sell the stock at $208,800 which is 4.4% higher than the current price. If it goes up and gets sold at that price then you would still clear about $185k which should make you just as happy as if you held it until you retired and pay the 15% capital gains tax rate and cleared the same $185K.
Of course the stock may not go up another 4.4% anytime soon but at least that would give you a good chance of getting off the treadmill of never selling it.
That example ignores state taxes but you need to keep those in mind and rework your actual numbers with state taxes too.
Statistics: Posted by Watty — Tue Oct 15, 2024 11:26 pm — Replies 24 — Views 735