Check to see if you qualify for the 0% capital-gains tax rate. Thinkstock By Sandra Block, Senior Editor From Kiplinger's Personal Finance, October 2013 "My wife and I are retired and need money from our mutual funds. What will we pay in taxes?" Depending on your income, you might not have to pay any taxes on your gains. The on-again, off-again 0% long-term capital gains rate for taxpayers in the 10% and 15% tax brackets has been made permanent—and that could benefit a lot of retirees.See Also: Get a Jump-Start on Your 2013 Tax Tab In 2013, married couples who file jointly qualify for the 0% capital gains rate if their taxable income is $72,500 or less; for single filers, the cutoff is $36,250. Rates for taxpayers in higher brackets range from 15% to 23.8%. Taxable income is what's left after you subtract personal exemptions (worth $3,900 each in 2013 for you, your spouse and your dependents) plus your standard or itemized deductions from your adjusted gross income. If you don't itemize, note that seniors 65 or older qualify for a larger standard deduction than younger taxpayers ($14,600 for married couples who are both 65 or older; $7,600 for single filers). Gains must be long-term. To qualify for preferential treatment, you must hold your shares of stocks or mutual funds more than a year before you sell. Short-term gains (on assets held a year or less) are taxed at your ordinary income tax rate. Advertisement In addition, the shares must be held in taxable accounts. Profits in tax-deferred retirement accounts, such as traditional IRAs, aren't taxed until you take withdrawals, but at that point you'll pay taxes at your ordinary income tax rate (see Make Your Money Last). Your gains could lift you into a higher tax bracket. When you sell stocks or funds, the profits will increase your taxable income. To pay no taxes on the sale, you'll have to calculate the amount of gains you can take before your income exceeds the threshold. Let's say your adjusted gross income (AGI) is $60,000. Assuming you're both 65 or older, your standard deduction and exemptions will knock your taxable income down to $37,600. That means you can realize up to $34,900 in long-term gains—boosting your total taxable income to $72,500—without paying taxes on the profits. If you take more gains, the 0% rate won't disappear; you'll just owe 15% on gains that exceed $34,900. Capital gains could increase taxes on Social Security benefits. Your AGI plays a critical role in how much, if any, of your Social Security benefits will be taxed. If your "provisional income" (your AGI plus 50% of your Social Security benefits plus any tax-free interest) exceeds $44,000 on a joint return, it's likely that 85% of your benefits will be taxed. As you consider taking profits, remember that capital gains are included in the calculation, even if they're tax-free, because they're part of your AGI, says Mark Luscombe, federal tax analyst for CCH, a leading publisher of tax information. If you have provisional income of $44,000 or less, less than 85% of your benefits will be taxed. Alternatively, if you're a recent retiree, taking advantage of the 0% tax break to generate tax-free income could enable you to postpone filing for Social Security, which can lead to higher lifetime benefits. Mark Joseph, a certified financial planner with Sentinel Wealth Management, in Reston, Va., is concerned that many taxpayers who qualify for tax-free gains may not know the break has been made permanent. "It's not often you get a gift from the IRS," he says. "When you do, you definitely want to open it."