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Capital Gains Tax

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capital Gains Office - www.WhatisTax.org Roger Chartier: - written 12/4/2011
updated and edited 5-6-2014 - subject to change

For Capital Gains and Losses use
Form 1040 (Schedule D)

If you have capital gains from your assets that you held for one year or less, you get taxed for it at the same rate as the income tax rates for that year.

Long Term Capital Gains:

There is a different capital gains rate for capital gains held longer than a year.

It is determined by the tax rate that you would fall under. Capital gains income from assets held longer than one year are generally taxed at a special long-term capital gains rate.

The rate that applies depends on which ordinary income tax bracket under which you fall.

It can go from 0% to  15%. (15% if you are in the 25% tax bracket and higher.)

History - after 2012, things changed.

In 2013, the tax rate on long term gains became 10% if you were in the 15% tax bracket.
For others, it became 20%.

Forget the qualified dividends starting in 2013 as regular tax rates will apply.
Tax Rate on Dividend Income:Qualified dividends get taxed at a 15% percent rate.
Ordinary dividends get taxed at your ordinary tax bracket rates.


Here is a note from the IRS: for 2013-14


  1. Long-term gains and qualified dividends taxed at

  2. 0% if taxable income falls in the 10% or 15% marginal tax brackets

  3. 15% if taxable income falls in the 25%, 28%, 33%, or 35% marginal tax brackets

  4. 20% if taxable income falls in the 39.6% marginal tax bracket

  5. 25% on Depreciation Recapture

  6. 28% on Collectibles

  7. 28% on qualified small business stock after exclusion
Correction to the 2010 Publication 550, Investment Income and Expenses
--05-JUL-2011
 
So here is the form (download it) that the IRS talks about  Publication 550 .

The tax rate for capital gains on "Collectible Assets" held for a year, or less is at regular rates for the bracket you find yourself in but it jumps up to 28% after a year.