topic Avoiding taxes in retirement in Get your taxes done using TurboTax

Avoiding taxes in retirement

user17524233574 — Wed, 16 Jul 2025 16:15:36 GMT

Retired and no income anymore, but I need to sell stocks to live off, just investments not IRA. Waiting on IRA until later. But all my stocks have a large profit in them. How can I avoid making my AGI so high, and being taxed more. Also I need to convert some IRA to Ross IRA, but again makes my AGI so high.

Re: Avoiding taxes in retirement

Cindy4 — Wed, 16 Jul 2025 16:31:49 GMT

Taking advantage of the zero percent capital gain rates of : Up to $48,350 in taxable income if single, and $96,700 if married filing jointly is one strategy.
Another one is to harvest losses by selling off some individual investments that are currently at a loss.
Converting the IRAs to Roth IRAs in lower income years and in spreading out the conversion in smaller amounts year over year can reduce the tax impact. Don't forget to factor in the standard deduction that will reduce your taxable income. $15,750 if single and $31,500 if married filing jointly.

Hope this helps!

Cindy

Re: Avoiding taxes in retirement

user17524233574 — Wed, 16 Jul 2025 16:48:07 GMT

But if AGI is going to be well above those limits?

Re: Avoiding taxes in retirement

Cindy4 — Wed, 16 Jul 2025 17:25:24 GMT

It sounds like you may be at the level of income where the best strategy may be tax bracket management. This is where you could look at several different scenarios of capital gains and ordinary income in different combinations to best utilize the capital gains brackets and the marginal income tax brackets. This will require a bit of time on your part.
Keep in mind that your ordinary income (like Social Security, pensions, traditional IRA distributions, Roth conversions, etc.) are taxed using the marginal rate. The long term capital gains are added to that to determine your capital gains tax rate. Any short term capital gains will be taxed at the ordinary rate.

When doing the Roth conversion consider paying the taxes from non-IRA funds. If the taxes are withheld from the converted amount, this will count as a distribution.

Charitable contributions can also lower taxable income, and when you reach 70.5 you can make a Qualified Charitable Distribution from your IRA these distributions count towards your Required Minimum Distributions (RMDs) but are not included in your AGI.
You could also speak to your broker about the advantages of selling stocks by specific identification rather than the customary first in first out method. This may help reduce your gains.

Hope this helps!

Cindy

Re: Avoiding taxes in retirement

Mike9241 — Wed, 06 Aug 2025 01:08:41 GMT

you probably should confer with a tax planning expert. They can look at your actual numbers to give the best advice. One caveat. The advice will be based on known tax laws. they can change in the future which could have an adverse effect on the original strategy. This means that periodically reviewing what steps your raking.

Re: Avoiding taxes in retirement

fanfare — Fri, 08 Aug 2025 01:18:50 GMT

You are discovering the deferred pain that comes with tax-deferred retirement accounts.

If your IRAs are successful you will have to remove each year more than your living expenses, which balance should go into a regular self-directed brokerage account where long-term capital gains rules apply.

@user17524233574