The Motley Fool Discussion Boards
Financial Planning / Tax Strategies
|Subject: Re: Taxes on Capital Gain||Date: 12/14/1997 2:41 PM|
|Author: TMFTaxes||Number: 913 of 124658|
<<I'm a newbie stock seller and can't quite wrap my mind around the IRS instructions for taxes on capital gains.
Can someone advise?
I've sold some stock, held for over 18 months, for a gain. My taxes this year will be substantially more than 90% of my tax withholdings from my paycheck (or last year, for that matter). This is based on the _sample_ 1997 tax forms on the IRS web site.
Now, I know I need to file Schedule D and 1040 for my US taxes, but...... do I file/pay estimated taxes on
the gains before the end of January? If I understand the rules correctly, I could be fined if I don't.>>
Well, I don't know if you understand the rules correctly or not. But I can certainly provide you with some additional information.
Regarding capital gains, here are the new rules...
CAPITAL GAINS TAX CHANGES
Over the last few years there has been much talk about reductions in the tax on capital gains. These cuts have finally been enacted as part of the Taxpayer Relief Act of 1997. New, lower rates for long term capital gains apply to gains realized after May 6, '97. As discussed below, with certain minor exceptions, long term capital gain rates have been reduced from 28% to 20% and, for certain lower income taxpayers, from 15% to 10%. (These rates also apply for purposes of the alternative minimum tax.) However, the new law has also extended the holding period rules so that to qualify for these lower rates you must hold the asset for m