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018R | Capital Gains Harvesting | Never Pay Taxes Again

Podcast Episode Summary how to harvest long term capital gains tax free.

  • Friday Roundup 7
  • Review of Monday’s episode with Jeremy from Go Curry Cracker
  • Brad and his family just visited Washington DC for the weekend and used points to stay at the Hyatt Place National Mall
  • Brad’s trip to Walt Disney World with his family, parents and in-laws
  • Jonathan now understands harvesting capital gains and losses after the episode with Jeremy
  • Unconventional choices: Jeremy and Winnie haggling at the farmer’s market near the close of business. Brad going to Disney World before Molly turned 3 so they could get her park ticket for free. Jeremy taking his son on a flight the day before he turned 2 so he could be a lap child on a business class flight
  • Quick hit takeaways from the Jeremy episode: He told his mom he had a ’60 year emergency fund’; he opened a Roth-IRA for his son for earned income on the website.
  • The power of having money and financial independence enabled Jeremy to walk out of his job instead of doing something that he didn’t want to do.
  • Brad’s story of when he left his job and taking the power back from corporate America
  • Investing philosophy and the importance of taking your brain out of financial decisions
  • His financial freedom clock started when he ‘got to broke’ and paid off his student loans

Capital Gains Harvesting | Avoiding long term capital gains tax

  • Case study: Married couple with one child. 30 years old.  $120,000 of income and maxing their 401k ($36k in total)
  • Qualified dividends and long-term capital gains are taxed at 0% if you’re in the 10% or 15% marginal tax bracket
  • Understanding how marginal tax rates work for income taxes
  • The definition of FI: having 25 times your annual expenses saved up and invested

The long term capital gains tax

  • The long term capital gains tax  defined & explained
  • How the Roth-IRA conversion ladder would work for this couple and how they can harvest long term capital gains tax free by using advanced FI techniques

Itunes reviews and questions from the community

  • Reader case study from Kevin: How to work with a spouse from an ultra-wealthy lifestyle and bring them over to the FI lifestyle
  • Find what makes you happy in life and what you value and spend accordingly
  • Kevin’s scenario is almost exactly like our case study on this episode
  • Travel Rewards question: How to maximize hotel points with Hyatt and Starwood hotels
  • What’s coming up on ChooseFI: JL Collins talks about the Stock Series, the Stapes of FI, JD Roth and Kristy from Millennial Revolution, the true cost of car ownership

Links from the show:

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