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Hi Fellow Fools, I am considering some profit taking and could do it this year or next. The rub is that my income is very low, which would put me in the 10% bracket (right?).

Is capital gains capped at 15%, or would mine be lower, at my income bracket. (10%).

Assuming the tax cuts expire, would I pay 20% on my cap gains next year, or would my capital gains be taxed at my ordinary income rate of 10%?

Bonus question: at what income level do rates go from 10% to 15%?

Thank you,
Mark Evans
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I am considering some profit taking and could do it this year or next. The rub is that my income is very low, which would put me in the 10% bracket (right?).

You'll find the brackets as well as a worksheet to help you determine taxable income in Form 1040-ES.

Is capital gains capped at 15%, or would mine be lower, at my income bracket. (10%).

For 2012 long-term cap gains are not taxed at the Federal level for those in the 15% bracket or below. The max rate for all others is 15%. Short-term cap gains are taxed as ordinary income.

Assuming the tax cuts expire, would I pay 20% on my cap gains next year, or would my capital gains be taxed at my ordinary income rate of 10%?

I feel confident predicting that long-term cap gains will not be taxed at a higher rate than ordinary income unless you have a lot of them. (I think the surtax on investment income above $250,000 kicks in next year.) I'm less confident in saying what the limits for LTCG will be. I think it's 10% and 20% for the two groups which are currently zero and 15%, but there was that "super" LTCG stuff that was around at one time, and I don't know whether that was repealed or not.

With the climate in Washington I don't pay attention until mid-November.

Phil
Rule Your Retirement Home Fool
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Phil forgot his usual comment on this decision: Sell when you need to sell the stock for investment reasons.

It's six months until next year. That's plenty of time for the stock to fall way more than any tax differences between this year and next.

--Peter
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The gain I'm considering is around $16K.
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Thanks Guys, both of those answers were helpful.
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