Announcement

Collapse
No announcement yet.

Long Term Capital Gains Treatment?

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

    Long Term Capital Gains Treatment?

    I was under the understanding that if your income was at some point, that the capital gains would be zero? I ran a scenario with no other income but the $150K capital gains (LT). It turned out to be some taxable income and taxes. I'm thinking I must have misunderstood the meaning of "0" capital gain rate. Can someone enlighten me?

    #2
    A taxpayer in the 10 or 15% tax bracket

    has a LTCG rate of 0%. Your hypothetical with $150k in cap gains is not in one of those brackets.

    Comment


      #3
      If a taxpayer is in the 15% tax bracket or lower, INCLUDING the capital gains, it is taxed at 0%.

      The key is that the capital gains is added to "taxable income" to determine a hypothetical 'regular' tax bracket, then the 0%/15%/20% capital gain rate is based on that hypothetical 'regular' bracket.

      Comment


        #4
        The portion of the LTCG that is in the 15% or lower marginal rate is taxed at 0%. If 150K LTCG is only income for MFJ taking std deduction, then 95,500 (12,600 std + 8,000 exemptions +74,900 end of 15% marginal rate) would be taxed at 0%. The balance of 54,500 would be taxed at the 15% LTCG rate since the marginal rate for this portion of income would be 25%.

        Comment


          #5
          Originally posted by zeros
          I ran a scenario with no other income but the $150K capital gains (LT). It turned out to be some taxable income and taxes. .
          Doesn't your software produce a QDCGTW as shown in IRS instructions? The amount subject to zero tax rate is clearly labeled.
          "You said it, they'll never know the difference. Come on, we'll paint our way out!" - Moe Howard

          Comment

          Working...
          X