I'm investing in the stock market and wondered what is the difference between the rate I get taxed for my personal income (from my 9 to 5) and the rate for capital gains?
Also, what event triggers the capital gains tax rate to kick in?
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2007-07-01 06:32:39 · 4 answers · asked by Anonymous in Business & Finance ➔ Taxes ➔ United States
That depends upon how long the asset is held. Assets held for one year or less are taxed at your marginal rate. Assets held for over one year are taxed at the long term capital gains rate. That rate is normally 15% unless your marginal rate is 15% or lower. In that case it would be 5%.
The event that triggers capital gains consideration is the sale of any asset. This could be stocks, real estate, etc.
Most investors have at least some capital losses from time to time. Those are used to offset capital gains first. Any excess can be used to offset ordinary income up to $3,000 in any tax year. Any loss above that amount is then carried forward to future tax years until it is used up.
2007-07-01 06:50:05 · answer #1 · answered by Bostonian In MO 7 · 0⤊ 0⤋
Long term capital gains get special treatment, and are currently taxed at either 5% or 15%, not more, and less than your personal bracket. Short term capital gains are taxed as ordinary income, so get the same rate as your wages.
Long term means you held the asset for at least a year and a day. Short term means you owned it a year or less.
2007-07-01 07:31:56 · answer #2 · answered by Judy 7 · 0⤊ 0⤋
I think the cut off is $10. If you make $10 in investment income, you owe taxes. If I remember correctly capital gains taxes are capped at 15% while income taxes can be more than double that.
2016-05-20 02:28:45 · answer #3 · answered by ? 3 · 0⤊ 0⤋
Capital Gains are taxed at the maximum rate of 15% at this time. Your income tax rate is of no effect.
2007-07-01 06:45:42 · answer #4 · answered by Blitzpup 5 · 0⤊ 1⤋