Hey everyone, I’m considering selling my investments before the end of the year since my income was less than $15k in 2024 due to quitting my job and traveling. Normally, I make six figures, so this year is very different. My husband also traveled with me, so our household income is under $30k.
We’ve also just moved back to the US from the UK. I’m pretty sure I won’t count as a UK tax resident for 2023/2024 since I didn’t work there, spent less than 90 days there, and didn’t own or rent a home during the tax year.
Most of my portfolio is in ETFs, and I was thinking of using this as an opportunity to simplify things. Not all of my investments are gains; a few are at a loss. Does selling make sense for me in this situation?
Would love to hear your thoughts. Thanks in advance!
Have you thought about converting a traditional 401k or IRA to a Roth? It might save you more in the long run. Also, how much in gains are we talking about, and are they long-term? Do you have any traditional IRA funds now? Even if it’s too late to convert a 401k, you could still look into traditional IRA to Roth IRA transfers.
Mai said: @Phoenix
I don’t have any IRAs or 401ks since I’ve been living outside the US. Is this still an option?
If you’re eligible, make sure to contribute to a Roth IRA for both you and your spouse (you have until April 2025 to do this for 2024). You can still sell for gains, but the Roth would be a nice move if you’re planning to retire in the US.
@Phoenix
Just a heads-up, you’ll need taxable compensation to contribute to an IRA. If you didn’t work or your income was excluded under the foreign earned income exclusion, you might not qualify.
Dorian said: @Phoenix
Just a heads-up, you’ll need taxable compensation to contribute to an IRA. If you didn’t work or your income was excluded under the foreign earned income exclusion, you might not qualify.
Ah, I thought you earned $30k in the US before traveling. If that’s not the case, then you might be out of luck for this year.
If you’re rebalancing your portfolio, it’s smart to do that before the year ends. Selling and buying back what you want to keep also seems like a good idea.
You might want to compare how much you’d make by holding long-term versus the benefits of selling now in a low tax bracket. Keep in mind that the lower income might also qualify you for other deductions. If you’re sure about selling, though, it sounds like the right call for your situation.
What you’re considering is called gain harvesting, and it’s a valid approach. Just note that some states treat capital gains as regular income, which can reduce the benefit of the strategy. Make sure to factor in your long-term plans before deciding.
>so am hopefully not considered a UK tax resident for 2023/2024
Did you mean 2024/25? The UK tax year ends in April.