Today I harvested some tax gains. Is a strategy to keep "taxable" investments tax-free.

In the process, I just converted to admiral shares and way lower expense ratios. In theory, I'd generally just immediately buy back what I sold; selling solely to lock in 0% tax rate on those gains. But in the end I decided to move funds over in the process and to be a little more efficient.

For myself, technically any long-term capital gains are tax-free for Federal. But... That's not entirely true because bumping up our AGI (even just a couple of thousand dollars) wreaks all sorts of havoc on the rest of our taxes. It decreases what we can put in tax-deductible IRAs and reduces our medical expense deduction, etc. But, whatever. It's not like it's going to get better than a 0% tax rate. (I mostly expect our income and taxes to be much higher in the future).

Since we've mostly been able to shelter our investments in retirement funds, this is the first time that I've had a tax-free gain to harvest. At about $3,000 for long-term gains and I figured I could live with that. (I probably wouldn't want to add much more to our tax return. We are already on track to maybe have 10% more wage income than last year).

For the kids, I have been selling off funds frequently to the same end, though I got a bit of a break the past two years. But for today, MM was at a good selling point. $1,000 investment income is tax-free for them. $1,500 is just some very minimal state tax. I might have timed it well enough that they are more in the $1k range and won't owe any state taxes.

Note to self:
$1,000 investment income is the sweet spot for kids. No requirement to file a tax return at this investment income level.

If you have no idea what I am talking about, here is a link that explains:

https://www.bogleheads.org/wiki/Tax_gain_harvesting

I guess this came to front of mind because my dad *finally* sold some mutual funds that he had wanted to sell a few years back. He's waited for tax reasons, and I guess given my tax perspective I have no idea what he has been waiting for. !! I mean, Obamacare was the reason the last two years, but now in 2017 I would have sold January 1. Not sure how long 0% investment tax rate will be around and am glad he finally took advantage.

As for the kids' "college" money, it's conservatively invested (balanced fund) and I have an equal amount in cash (our cash savings/emergency fund). So I feel that I Can shoulder any short-term market fluctuations. It seems way too premature to do anything with that. Kids start college in 4 & 6 years. Keeping in mind that we used our own "college money" for a home down payment instead of college. (College is still super cheap here and housing is only more insane now than it was then). This really could be money that remains untouched for 10+ years. So for now, we have no plans to cash out any college money or to shift to a more conservative allocation. We may set aside more new money in cash, as college becomes more imminent.