Saturday, June 25

Capital Gains Tax: What is it and how to calculate?

A capital gain is a difference between the prize you paid for acquiring an asset and the final prize when you sold it.

For example, if you acquire an asset, and paid $10, and sell it for $20, the difference is the capital gain.

What’s the Capital Gains Tax?

When you profit from a sold asset, there’s taxation for your profit called Capital gains tax.

The tax applied to capital gains depends on the sold asset and quantity obtained for the same asset.

How do you calculate the Capital Gains Taxes?

The IRS has Form 8949 for reporting the capital gains.

According to H&R, there are two ways to divide your capital gain taxes.

Short-term capital gain tax rates:

If you have held a property for one year or less, the federal tax rate could go from 10%, 12%, 22%, 24%, 32%, 35%, or 37%.

Long-term capital gain taxes:

H&R defines long-term capital gain taxes as “the capital gains apply to assets that you held for over one year.”

The taxation is different from the long-term and the short-term capital gain tax rates.

“The federal tax rate for your long-term capital gains depends on where your income falls related to three cut-off points.”

The gains are taxed at a maximum of 28%.

-Single filers with asstes sold at $41,675 – 0% Tax Rate

-Single filerswith asstes sold at $41,675 to $459,750 – 15%

-Single filerswith asstes sold over $459,750 -20%


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