Capital gains taxes

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cppoly
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Capital gains taxes

Post by cppoly »

Long term capital gains tax is 15% and short term is 25%. You also have to consider state tax as well. I believe it is 5% for NY. My first question is, is state tax on LTCG and STCG the same percentage typically? My next question is, are there any other taxes to be aware of or would 20% and 30% be the absolute most I can expect to pay for LTCG and STCG, respectively (assuming income is in the 15% and 25% tax brackets for LTCG and STCG)?
Default User BR
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Re: Capital gains taxes

Post by Default User BR »

Short-term gains are taxed at your marginal rate, not necessarily at 25%. You would need to check your individual state regarding their laws.


Brian
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cppoly
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Re: Capital gains taxes

Post by cppoly »

Thanks but the question is asking if the rates are absolute and there are no hidden taxes.
MnD
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Re: Capital gains taxes

Post by MnD »

Who knows - every state and every individual tax circumstance vary so there are hundreds of permutations.

Go into TurboTax and add $100 of short term capital gains and see what happens to your state and federal tax liability.
Repeat the same entering $100 additional in long term capital gains.
The dollar increases in your federal and state tax liability divided by $100 are your personalized answers.
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Bob's not my name
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Re: Capital gains taxes

Post by Bob's not my name »

There are states near NY that tax STCG and LTCG quite differently. Why do you care?

As for federal, there are many different effective rates on STCG and LTCG. For example, it's possible to have a 90% federal tax rate on LTCG and a rate on STCG that is only 11% higher (100%).
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Frengo
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Re: Capital gains taxes

Post by Frengo »

Bob's not my name wrote: For example, it's possible to have a 90% federal tax rate on LTCG...
How would that work, assuming it is not the effect of bad algebra ?
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cheese_breath
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Re: Capital gains taxes

Post by cheese_breath »

Don't forget about the possibility of city taxes.
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cppoly
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Re: Capital gains taxes

Post by cppoly »

Bob's not my name wrote:There are states near NY that tax STCG and LTCG quite differently. Why do you care?

As for federal, there are many different effective rates on STCG and LTCG. For example, it's possible to have a 90% federal tax rate on LTCG and a rate on STCG that is only 11% higher (100%).
I would like to know how much I should prepare to pay in taxes at the end of the year so I can be prepared for the bill and not be surprised. I don't necessarily care about other states' LTCG and STCG tax code but I framed the question as if most states treat both the same, which you are saying is incorrect. Thanks for the info so far.

I usually make the question more complicated when I start using numbers in my examples but right now I believe I can safely say I should prepare for 20% tax on LTCG and I should be fine.
sport
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Re: Capital gains taxes

Post by sport »

Your income taxes may contain a variety of other provisions that are affected by your taxable income level. For example, the amount of medical expenses that can be deductible is determined by your income. Another example is the amount of social security that is subject to taxation. There are others as well. This is why the suggestion to try the changes to your own situation is the only way to know for sure.
Jeff
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Re: Capital gains taxes

Post by Bob's not my name »

Frengo wrote:
Bob's not my name wrote: For example, it's possible to have a 90% federal tax rate on LTCG...
How would that work, assuming it is not the effect of bad algebra ?
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grabiner
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Re: Capital gains taxes

Post by grabiner »

cppoly wrote:Long term capital gains tax is 15% and short term is 25%. You also have to consider state tax as well. I believe it is 5% for NY. My first question is, is state tax on LTCG and STCG the same percentage typically?
It varies by state. NY, like most states, taxes all income at the same rate; the rate depends on your tax bracket. MA taxes short-term gains at 12% and other income at 5.3%.

To prepare for your own taxes (and pay estimated tax if necessary), you need to check your own state's tax forms.
My next question is, are there any other taxes to be aware of or would 20% and 30% be the absolute most I can expect to pay for LTCG and STCG, respectively (assuming income is in the 15% and 25% tax brackets for LTCG and STCG)?
There are many tax provisions which phase out with income. For example, if you are in the phase-out range for the child tax credit, an extra $1000 of capital gains will cost you $50 of tax credit in addition to the tax increase.
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cppoly
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Re: Capital gains taxes

Post by cppoly »

Thanks
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