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Please excuse my ignorance, but I don't understand this. Scenario 1: I have $100 in gains this year. I owe $30 in taxes. I am left with $70. (Say $100 is 30% b
by parthpatel1001 9y ago
Please excuse my ignorance, but I don't understand this.
Scenario 1: I have $100 in gains this year. I owe $30 in taxes. I am left with $70. (Say $100 is 30% bracket)
Scenario 2: I have $100 in gains this year. I write off a $10 loss. (Say $90 is 25% bracket). I owe $22.5 in taxes. I am left with $67.5.
Is it the case that writing off the loss is better, if you can be bumped so far down the brackets that (gains - loss)(1-lower_tax_rate) > (gains) (1 - higher_tax_rate)?
- lotyrin 9y agoNo, it's continuous with no edge effects like this because only income within a bracket is taxed at that bracket.