Short and Long Term Capital Gains Tax Brackets for 2009, 2010
Individuals and corporations pay income tax on the net total of all of their capital gains. This is no different than the tax we pay on other sorts of income. The good thing about capital gains taxation is the preferential rate compared to the ordinary income tax rate.
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The preferential rate is intended to provide incentives for investors to make capital investments to fund entrepreneurial activity. Now you may be wondering what the tax bracket is for capital gains.
Of course there are several factors we have to consider. The amount the investor is taxed depends on his or her tax bracket, and the amount of time the investment was held before being sold.
Short Term Capital Gains
Short term capital gains are classified as an investment held for one year or less. This category taxes the investor at his or her ordinary tax rate.
Long Term Capital Gains
Long term capital gains are classified as an investment held for more than one year or longer. This category is taxed at a lower rate than short term capital gains. If you happen to be in the lowest two income tax brackets then the capital gains tax rate will be five percent. The other income tax brackets will fall into the capital gains tax rate of fifteen percent. Keep in mind these rates can change with legislation. Rates can be extended or they can expire and revert to a previous rate which may be higher.
Capital Gains, Capital Losses
If you sell your capital investment for more than what you paid for it then you have a capital gain. If you sell your investment for less than what you initially paid for it then you have a capital loss. Capital gain profits are subject to taxation and a capital loss is not deductible.
Tax Bracket Calculator
If you would like to find your income tax bracket so you can find your capital gains tax bracket then I suggest you visit TurboTax Online.
They have wonderful tax calculators that show the amount of your refund or tax owed as you enter your data and it updates that visual as you answer questions. Technology is here to make our lives easier and TurboTax has the best technology I’ve seen. Visit Turbo Tax Online today to see how they will make your life easier and keep your money in your pocket!