A Person lives in Albany, NY, with salary of 110k. His Marginal Tax Rate are: 24% (federal), 6.57% (state) and 7.65% (FICA). Total 38.22%. He has invested his money: 50% in stocks, 50% in simple saving account. He keeps his stock investment with no intention of selling. He's producing an income from dividends and Saving account's interests. All his dividends are qualified, so he will be taxed "long term" on them. Saving's interests are obviously taxed "short term".
In calendar year, all he'll earn is:
- His salary
- $500 from dividends (taxed as "long term")
- $1000 from saving account's interests (taxed as "short term")
Now, here's the situation... sometime in the middle of the year, he wants to pickup new stocks. His intention is to hold, but suddenly, the price of newly bought stock fall and he's down by $1000. Is this a perfect situation to sell and buy similar stock? (Let's assume for the purpose of that example that he's 100% sure, it's not "wash-sale rule").
Second question, can you generalize, that if you're in the situation described above and have short term losses you should keep realizing them? Let's assume you have alternative stocks that doesn't trigger "wash-sale rule". I'm asking because I understand that "tax loss harvesting is a process of deferring taxes until a future date". But if I will sell that alternative stock with "long term" gains (eventually, in the future) - that is a benefit, because this year I'm not paying 38% taxes on them. Is my thinking correct and you can generalize it this way?
Submitted September 30, 2019 at 05:51PM by IshThomas https://ift.tt/2n0P5vH
