There is a legal way to pay Zero 0% income tax for 2023. How?
You may legally pay Zero 0% income tax if you remain in the 0% capital gains bracket.
What are capital gains or losses? Capital gains are the increase in the value of a sold asset. The realized difference is the price paid for an asset and the price sold. A long-term gain/loss is holding the asset for a minimum of 1 year and 1 day (366 days) before sale. A short-term gain or loss is holding the asset for a year (365 days) or less.
|Single||Married Joint||Single||Married Joint|
|0%||To $41,675||To $83,530||To $44,675||To $89,250|
|15%||$41,676 to $459,750||$83,531 to $517,200||$44,676 to $492,300||$89,251 to $553,850|
|20%||$459,751 or more||$517,201 or more||$492,301 or more||$533,851 or more|
Let’s take a look at an example for year 2023:
A Single tax payer could make $55,000 capital gain, less the standard deduction of $13,850 and their taxable income falls within the $44,675 bracket, thus 0% tax.
Under the current tax code and rates this would be an ideal situation when you are coming up to your retirement years collecting your social security.
For a one person business, that is taxed as a S-Corp, under the age of 50, you could have a W2 income of $35,000 contribute to your traditional 401K of $22,500 and a company match of
$35,000 into your traditional 401K. Under this example you would pay Zero 0% income taxes because your taxable amount would fall under the 0% bracket. You would have to pay the FICA, both the employee and company liability. Over the age of 50, you could bump up your W2 to
$42,500 and a company match of $42,500. This would be allowed under the current Tax code which sets to expire at the end of 2025. Also, when you pull out your RMD from your traditional 401K you will have to pay ordinary income tax rates.
This does not take into account any distribution from a Roth IRA or Roth 401K which will be tax free if you complied with the requirements. We always suggest investing in a Roth IRA to continue to build a tax free account. Our online tax planning can make this possible! Even if you may not get to be 0%, the next rate is not that hard to realize.
If you are married and you plan accordingly, you can also take advantage of these same rules. That could be a sizeable income taxed to your advantage.
Plan away… better yet, do your tax planning with us – together we can make zero income tax possible.
Want to learn more?
You may want to consult and work with 1099 Accountant – we offer online bookkeeping, online advisory services and online tax and accounting services. We offer reasonable rates. We only work with digital nomads, independent contractors, freelancers, and one-person business. We work with locum tenens from California to New York City and everywhere in between. And yes, even Hawaii.
Contact us toll-free (855)529-1099 or make an appointment for a free consultation. https://1099accountant.com/contact/