Hi, I need to amend my tax return for 2006. I overlooked money that I got from selling stocks that I held for more than 5 years. I think that the tax rate on this money would be lower than my income rate since it was a risk investment and I held it for more than 5 years. The Amendment form 1040X does not seem to be able to handle this situation. It seems to only cover adjustments to income taxed at the normal tax rates for income.

What federal tax rate would apply to this gain?

How would I submit the amendment?---What IRS form?

Do I have to submit an amended state (NJ) return?

What would be the percent for the state tax for this long term capital gain, if any?

Thanks EdQ

You submit 1040X along with a corrected Schedule D, showing your gain from the sale of the stock. The income from the stock sale is included along with your other sources of income on line 1 of 1040X. Because you held the stock for more than 1 year, it is considered a long term gain. The tax rate on long term gains is either (a) 5% if you're in a 15% or lower tax rate for ordinary income, or (b) 15% if you're in a higher tax bracket (i.e, 25% bracket and up).

Yes, you should submit an amended NJ return.

Here's a link to the IRS web site that explains how to file the 1040X.
Amending Your Tax Return (http://www.irs.gov/newsroom/article/0,,id=108657,00.html)

EdQ:

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Everything else Ebaines told you is valid.