What is a Taxable Event?

What is a Taxable Event? Bulman Wealth

Put plainly: a taxable event is a transaction that causes someone to owe money to the government in the form of taxes.[1] Seems simple enough, right? When it comes to retirement and savings, there are a few important taxable events that you might want to keep an eye on.

Earned Income

Receiving earned income from an employer is a taxable event.[2] When you receive earned income from an employer, you have to pay a percentage of that money to the federal government.[3] You also will probably have to pay some amount to the state you live in, and you may have to pay some amount to the local government as well.[4]


When you receive dividends for stock ownership, that is usually a taxable event (although there are some exceptions to this rule).[5] This is especially important to keep an eye on if you are planning to use dividends as part of your retirement plan. Also, be sure to understand the difference between ordinary dividend income, which is taxed at your income level, and qualified dividend income, which may be eligible for a lower tax rate.[6] The rate at which these dividends are taxed also varies on the shareholder’s income.[7]

For people aiming to use dividends as income, if your earned income is lower than $42,625, you will not owe federal taxes on dividends.[8]

Selling an asset

Selling any kind of capital asset for a profit is a taxable event.[9] Capital assets are things like cars, property, stocks, bonds, collectibles, and antiques.[10] The sale of these kinds of assets is taxed differently, as any gain from the sale is categorized as a capital gains tax. The amount of the capital gains tax depends on how much you gained from the sale, how long you have owned the asset, and what your income level is.[11] The sale of assets that you have owned for less than a year is charged at a higher rate, which is called the short-term capital gains tax.[12] Assets that you have owned for more than a year are charged less and are considered long-term capital gains.[13]

The Takeaway

Taxes and tax management can be an important part of wealth management. Most folks are aiming to keep as much of their own money in their hands as possible. Tax optimization strategies are also very important for retirees and people who are about to retire.

If you’re looking for someone to take a look at your finances and give you suggestions, you might want to Click HERE to reach out to our advisors today at Bulman Wealth Group for a complimentary review.


All content is for information purposes only. It is not intended to provide any tax or legal advice or provide the basis for any financial decisions. Nor is it intended to be a projection of current or future performance or an indication of future results.

Opinions expressed herein are solely those of Chris Bulman Inc. dba Bulman Wealth Group and our editorial staff. The information contained in this material has been derived from sources believed to be reliable but is not guaranteed as to accuracy and completeness and does not purport to be a complete analysis of the materials discussed. All information and ideas should be discussed in detail with your individual advisor prior to implementation. Investment advisory services are offered through Chris Bulman Inc dba Bulman Wealth Group, an SEC Registered Investment Advisor. Insurance products and services are offered through Chris Bulman, Inc. dba BWG Insurance Agency and Ameritas Life Insurance Corp., CA State Insurance License # 0M46922. Being registered as an investment advisor does not imply a certain level of skill or training.

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