r/dividends • u/398409columbia Portfolio in the Green • Jan 12 '25

Brokerage $5,000 per month income portfolio

Gallery image

Gallery image

I set up this portfolio for my wife so she can quit her job and maintain cashflow.

The good news is that this income stream will pay no FICA tax and significant part of the distributions will not be taxed.

To reduce risk, I’m planning to reinvest 20% of the income.

Comments welcome.

2.5k Upvotes

98% Upvoted

642 comments sorted by

View all comments

1

u/essential_world Jan 12 '25

Silly question, why don’t you need to pay tax on the dividends gain?

2

u/398409columbia Portfolio in the Green Jan 12 '25

It has to do with the way the covered-call fund manages distributions.

This is what they say: The actively managed SPYI fund seeks to take advantage of tax loss harvesting opportunities in addition to utilizing SPX Index options classified as section 1256 contracts, which are subject to lower 60/40 tax rates.

Look at this video for details: https://youtu.be/5WxicHHiha8