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Capital Gains tax questions
Earlier I asked about long term capital gains tax liability in regard to selling stock to pay off the mortgage. The answer I got was as follows: "The long term capital gains tax rate depends on your adjusted gross income (AGI). If you are married filing jointly and your AGI is less than $70,700 the capital gains tax rate is 0%. Above $70,700 its 15%. And yes, you report the sale on form 8949, which gets carried to Schedule D, and the result from Schedule D is carried into Form 1040.
Thanks so much for the help. I am married and filing jointly. I have several questions as follows: 1.) Is only the amount above $70,700 taxed at 15% or is the whole amount taxed when it goes past this amount? 2.) The capital gain is then recorded on block 13 on 1040A. Then the total is added up, including all other income to get the total AGI. From that point over to page 2 of 1040, the deductions are figured, etc. to get a total "taxable income" on block 43. My question is how are the monies from the "capital gains" shown on page 1 separated from "regular income" if they are taxed at a different rate? Does it all just go into the "same pot" as AGI, and then pared down by deductions to get total taxable income? Thanks in advance for your kind help. J.M. Morgan [email protected] |
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Long Term Capital Gains Tax 2011 Held Longer Than One Year
•0% for taxpayers in the 10% & 15% bracket, •15% if you are in the 25%, 28%, 33%, & 35% bracket •Real Estate longer than one year 5% or 15% after any exclusion amount. If you use any software to do your tax return, it will take care of your tax calculations. |
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The math works out like this:
Adjusted Gross Income = "regular income" (to use your term) + capital gains taxable income = AGI -deductions Then on the schedule D workesheet taxes are calculated on (a) the AGI minus long term caital gains amount based on your tax bracket, and (b) your long term capital gains based on the appropriate rate of 0% or 15%, and then (a) and (b) are added together to make your total tax and brought to line 44 of form 1040. I whole-heartedly agree with the suggestion from the others to use tax software for all this. |
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