Tax question

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Topic Author
deci02
Posts: 194
Joined: Mon Apr 02, 2007 10:19 am

Tax question

Post by deci02 »

This question pertains to the zero tax liability for the 10% and 15% income brackets on qualified dividends & LT capital gains in effect for 2008.

Are LT capital gains taxes and qualified dividends taxes gradual, similar to ordinary income? IOW, with ordinary income your first few thousand are taxed at 10%, the next few thousand at 15% and so on....

So for example in 2008 lets say you are in a 25% or higher federal bracket. Would that mean your entire LT capital gains and qualified dividends would be taxed at the normal 15% or would you still have zero tax liability on parts of it?

Thanks,
Doug
earlyout
Posts: 1436
Joined: Tue Feb 20, 2007 5:24 pm

All of it taxed at 15%

Post by earlyout »

My understanding is that if you are in the 25% or higher federal bracket in 2008, you would be taxed at 15% on all of your LTCG and QDs. If your other taxable income is less than the top of the 15% income tax bracket, then LTCG/QD that would take you to the top of the 15% bracket would be subject to the 0% tax rate.

EO
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Mel Lindauer
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Re: All of it taxed at 15%

Post by Mel Lindauer »

earlyout wrote:My understanding is that if you are in the 25% or higher federal bracket in 2008, you would be taxed at 15% on all of your LTCG and QDs. If your other taxable income is less than the top of the 15% income tax bracket, then LTCG/QD that would take you to the top of the 15% bracket would be subject to the 0% tax rate.

EO
That's my understanding, too.

Regards,

Mel
Topic Author
deci02
Posts: 194
Joined: Mon Apr 02, 2007 10:19 am

Post by deci02 »

Thanks EO for the clear explanation and Mel for the confirmation. This forum is a great resource.

Regards,
Doug
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