Of course, a lot of your assets will likely have substantial unrealized gains. If you have tax lots you bought at a high price, you can liquidate them with limited tax implications. Using specific tax lots allows you to closely control your capital gains. A tax lot is a group of shares bought in a single purchase for the same price. There are a couple of strategies you can use in combination to keep your tax bill manageable. Not only will you pay 0% on your Social Security income, you'll likely pay 0% in taxes on your capital gains as well. If you can limit your gains to the point where you stay below the combined income threshold for Social Security taxation, you'll find yourself with a very small tax bill. When you sell a security in your brokerage account, you'll only pay taxes on the gains. Strategically sell assets in your brokerage account That's much more effective than the charitable contribution itemized deduction.ģ. QCDs come straight out of your IRA to a nonprofit, so they don't count toward your AGI. If you can make strategic Roth conversions before you collect Social Security, you'll likely be able to lower your lifetime tax liability.Īnother possibility is to use qualified charitable distributions (QCDs) from your IRA.

Withdrawals from Roth accounts don't count toward your AGI. The best way to get around this is through the use of Roth accounts. That's why minimizing your required minimum distributions is an effective tax planning strategy. As such, it's valuable to limit your distributions as much as you can as you bump up against those thresholds. And any amount above that, you'll add 85% of your benefits to your taxable income.Įffectively, every dollar you withdraw from your retirement account that pushes you further above those thresholds will get taxed at 1.5x or 1.85x the rate until your entire AGI surpasses the top of the thresholds. The amount above that level and below $34,000 for individuals or $44,000 for couples, you'll add 50% of your Social Security benefits to your taxable income.

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