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What is the capital gain tax rate?
The capital gains tax rates are determined by the type of investment asset and the holding period of the asset. In additional to the federal capital gains tax rates, your capital gains will also be subject to state income taxes. Many states do not have separate capital gains tax rates. Instead, most states will tax your capital gains as ordinary income subject to the state income taxes rates.
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6.85% in 2008, from the NYS web site
Is it best to put money into 401K and pay taxes at earned income rates or pay taxes up front and pay capital gains and dividend rates?
There are a few different ways to answer this question. * First, it matters whether or not your employer matches any of your 401(k) contributions. Ninety percent of employers …do; if yours does too, you'll want to begin by putting at least as much money into the 401(k) that your company will match. For example, let's say your company will match 25 cents for every dollar you contribute up to 6% of your income. You make $100000 per year; 6% of your income is $6000. So, you contribute $6000 to your 401(k) and your company kicks in $1500 (25 cents for every dollar you put in, up to 6% of your income). You can certainly contribute more than 6% of your income (although no more than 35% of your income or, for 2007, $15500), but you want to give enough to get the company match; otherwise, you're leaving free money on the table. * Second, regardless of whether or not your company matches your 401(k) contributions, you should consider opening a Roth IRA (individual retirement account). Unlike the 401(k), in which your contributions are pre-tax (meaning that you make your contributions out of your salary and then pay taxes on the amount that's left; that leads to fewer taxes now, but then you pay taxes when you withdraw the money in retirement), Roth IRA contributions are after-tax: you pay taxes now but then you can withdraw the money for free in retirement. This is wonderful for several reasons: 1) Tax rates are at historic lows right now, so the odds are good that we'll all pay significantly more taxes in the future; that makes both the 401(k) option and your idea of investing in the market outside of a retirement account not quite so good. You don't know what the future tax rates will be, and the odds are that they'll be higher; the Roth IRA takes away that problem. Pay (relatively low) taxes now, and take the money out for free later. 2) Since you can't save a significant sum per year in Roth IRAs ($4000 in 2007 if you're under 50), you'll still need to save for retirement in your 401(k) plan (or elsewhere), and so having a 401(k) where you will pay taxes and a Roth IRA where you won't pay taxes gives you what the experts like to call "tax diversification." When you retire, you'll then have some options about which account to pull money from so that, depending on several factors (such as what your income bracket is that year, whether you sold your house or stocks, etc.), you'll be able to decide whether you want to take out money from an account where you'll owe taxes or where you won't. 3) Lastly, since you contribute to a Roth IRA with after-tax dollars, those dollars count for more: you get to keep every single dollar you pull out in retirement. In a 401(k), you'll have to use some of those dollars to pay taxes, so not all of those dollars that you put in the 401(k) are really for you--you're putting away some of them for the IRS. So--long answer short--your best bet is to invest in your 401(k) first if there is any company match. Don't leave free money on the table--it's like you're forfeiting part of your salary. Invest only up to the match, and then put the rest of your money in a Roth IRA (such as a Vanguard Total Stock Market index fund). Contribute the full $4000/year to a Roth IRA. If you have money leftover you could consider investing it in the market, as the long-term capital gains and dividend rates are likely lower than your tax rate--but that's not a good plan if you're investing this money for retirement, as these rates expire in 2010 and there's no guarantee they'll stay low. So a safer strategy would be to invest the extra money (after you've made a full $4000 contribution to your Roth IRA) back into your 401(k). While I was typing my contribution someone else submitted one, which actually points out some different takes I hope I address. This is certainly a question that every financial type has an opinion on. I find it is frequently shaded by where they earn their fees, and which items they weigh more heavily than others. I believe they all would agree that your personal financial situation, age, expected needs, and more, etc., all enter the equation. Unquestionably, the comparison is really more in line with deciding on contributing to a before tax IRA or an after tax one, called a Roth IRA. I believe that in a 401(k) situation, the fact that there is normally a matching of at least some part of the contribution, by the employer, (frequently 50% of the first 6% of your salary) contribution, would mean virtually everybody would agree that is a "must" take advantage of at least. (You contribute 6% and get credit for 9%). Contributions above that (to the allowed 15% of salary) would be the question. First most planners would say you need to have some after tax money as an emergency fund…3 to 6 months needs is the amount you commonly hear. Again, more or less depending on your personal situation. But that seems logical and indisputable. So, once you've done the basic "musts", got an emergency account, taken advantage of matching benefits, paid off credit cards, etc., should you IRA or Roth (or 401k or not) with the additional funds you are saving for long term or retirement? Personally, I go with some steadfast ideas: Especially as Tax rates are now historically decreasing, the main new tax revenue ideas revolve around making a National sales tax and changing what income is taxable or expenses dedcutible (like eliminating home mortgage interest deduction) or such.. all these things would still effect you if you paid income tax on the current investment funds, yet get you no benefit. I am a tax expert...(more degrees than a thermometer as the saying goes)…and a tax planning ruke that is virtually ALWAYS true says: …Don't pay taxes now that you can otherwise pay later… I vote for the before tax investment. (And consider, it isn't just held to retirement, however many years that may be, but may well be finally withdrawn and taxed 20 -30 or more years after retirement). Some thoughts on that same line: What if the tax ideas we're seeing actually eliminate (or really start to replace) the income tax….do you think the Feds will give you a refund? Unlikely. You'll have paid a tax you don't have to. (Rates, while low , are political suicide to increase, is considered economically regressive, and again, holding rates but increasing the tax base works fine....or going to a new program altogether). What if your life takes a change....you end up in Europe...or someplace. US ain't sending you a refund. Pay today means pay the State today. Then retire to Florida ot Nevada, etc. So I would pay NJ (or NY, or Calif, etc.) 9+% now, and like so many, retire where there is no income tax? Bad investment. Paying with future dollars are deflated dollars. The more assets you have, the better. Taxes paid are not an asset. Investment accounts are. Something many seem to ignore: The money in IRA/401k is generally treated specially in many life situations; exempt from bankruptcy/seizure; lawsuit, etc. Your other assets are just an attraction to the vultures. Very Importantly -- Inherited without tax - giving a new stepped up basis to your beneficiaries (so if you die and paid tax on your invested funds, that is money your family won't get. If you didn't pay the tax, that money will pass to them and essentially NEVER be taxed). And unless you spend all your returement funds (which is uncommon), this may well become a big part of your estate. While intended for long term and retirement, (a real and big need), it is still available under many programs for housing/education, etc. Presumably, when your withdrawing from the account your no longer working (even true if a hardship period). Your income is low, your income tax rate is lower. (Your other expenses may be too). What you withdraw is rateably taxable. In a taxed account, the gains and dividend taxes really cut into what your realizing on the investments as you go along..agreeably you MAY have to pay them in the future. However, if you expect to lose money on your investments, do it in a taxable account. (Losses in a taxable account may well be used to offset current income…but not in a non taxable one.) Finally - Just the idea that the governments solution to fears of social security, economy, etc., and people wanting to save more for retirement is to override years of promoting tax deferring plans, and say essentially, the way to do it is to pay them more taxes now...seems fishy and I'm sort of leary about!
What are the tax rates on short term capital gains and long term capital gains for a student with no income but who has 10000 in the stock market?
There is no such animal as a short term capital gain or loss... When you hold the stock for a year or more it is treated as capital and the tax rate on your realized gains is …(currently) 15%. If you sell out and had held for less than a year, your gain or loss is netted together with other ordinary income such as the pay you get from a regular job, and is subject to the same tax rates as for your regular paycheck.
5.75% for both short term and long term.
Same as the statute of limitations on any other income tax. For example, if it is a U.S. federal income tax, and a return is required but not filed, then the statute of …limitations doesn't start until the return is filed, and then runs for three years, assuming the taxpayer does not leave the US during that time.
Apparently (and surprisingly) the top Capital Gains Tax in Wisconsin (as of 2007/2008) is... 2.7% (as opposed to the top Income Tax rate which is 6.7%). cf http://sb…ecouncil.blogspot.com/2008/01/wisconsin-and-capital-gains-taxes.html Not certain whether this is an across-the board rate, or (if this is the "top" rate) it is lower for lesser capital gains, nor what the table is; but this is enough to go on for calculation/guesstimation & pre-planning work.
California capital gains tax is not different from tax on other forms of income. The rate for income above approximately $48,000 is 9.3%
No such thing. Basically, age is not a factor in taxation...
Illinois income tax is based on your federal Adjusted Gross Income (AGI), plus a few state adjustments. If the capital gain is included in your federal AGI, you will als…o pay state tax on it. There is no special Illinois state tax rate for capital gains, it is taxed at the same rate as ordinary income.
If this is a business asset then you will have to use the 1040 tax form 4797 to report the transaction on. You will use the information that is on the 1099-B to report the tra…nsaction on your 1040 tax form. If this is personal property (non-business) and you have owned it for more than one year and it is sold at a gain. You will have a long term capital gain (LTCG) that will be taxed at the 0% to 15% maximum capital gain tax rate. The transaction will be reported on the schedule D of the 1040 tax form. When you complete the schedule D all the way through line by line the LTCG will be taxed at the 0% to 15% maximum capital gain rate. You will have to complete the schedule D worksheet on page 10 of the schedule D instruction book all the way through line 36 as that will be where the tax numbers will come from to go on line 44 of your tax return. For forms and instruction go to IRS gov website and use the search box for schedule D and you will find the instructions and form that you would use for this purpose.
It is possible to make profits by buying shares, property etc. at a low price and then selling at a higher price. Profits made in this way are called capital gains and are sub…ject to tax by the government. Profits mad ein this wayare called capital gains and are subjectto tax by the government. Profits made on anindividual's home, private cars and assurance policies are not subject to capital gains tax. Hope this was helpful! -Pinkmouse
According to current figures as of April 2008 the following data applies. Capital gain taxes are based in large part on your ordinary tax rate.... * Ordinary tax r…ate 10%, long term capital gains tax 0%, short term capital gains tax 10% * Ordinary tax rate 15%, long term capital gains tax 0%, short term capital gains tax 15% * Ordinary tax rate 25%, long term capital gains tax 15%, short term capital gains tax 25% * Ordinary tax rate 28%, long term capital gains tax 15%, short term capital gains tax 28% * Ordinary tax rate 33%, long term capital gains tax 15%, short term capital gains tax 33% * Ordinary tax rate 35%, long term capital gains tax 15%, short term capital gains tax 35%
Almost everything you own and use for personal purposes, pleasure or investment is a capital asset. # When you sell a capital asset, the difference between the amount you …sell it for and your basis, which is usually what you paid for it, is a capital gain or a capital loss. # You must report all capital gains. # You may deduct capital losses only on investment property, not on property held for personal use. # Capital gains and losses are classified as long-term or short-term, depending on how long you hold the property before you sell it. If you hold it more than one year, your capital gain or loss is long-term. If you hold it one year or less, your capital gain or loss is short-term. # Net capital gain is the amount by which your net long-term capital gain is more than your net short-term capital loss. # The tax rates that apply to net capital gain are generally lower than the tax rates that apply to other income and are called the maximum capital gains rates. For 2008, the maximum capital gains rates are 0%, 15%, 25% or 28%. # If your capital losses exceed your capital gains, the excess can be deducted on your tax return, up to an annual limit of $3,000 ($1,500 if you are married filing separately). # If your total net capital loss is more than the yearly limit on capital loss deductions, you can carry over the unused part to the next year and treat it as if you incurred it in that next year. # Capital gains and losses are reported on Schedule D, Capital Gains and Losses, and then transferred to line 13 of Form 1040. For more information about reporting capital gains and losses, get Publication 17, Your Federal Income Tax, and Publication 550, Investment Income and Expenses Currently net capital gain is generally taxed at rates no higher than 15% for most taxpayers, although, for 2008 through 2010, some or all net capital gain may be taxed at 0%, if it would otherwise be taxed at lower rates, for those with lower incomes. There are three exceptions: # The taxable part of a gain from selling Section 1202 qualified small business stock is taxed at a maximum 28% rate. # Net capital gain from selling collectibles (such as coins or art) is taxed at a maximum 28% rate. # The part of any net capital gain from selling Section 1250 real property that is required to be recaptured in excess of straight-line depreciation is taxed at a maximum 25% rate.
You will report the sale of a capital asset on your 1040 tax form either the schedule D or the schedule 4797 and you will either have a gain or a loss on each transaction that… you have to report on the schedules. You are not allowed to claim a loss on the sale of a personal asset but any gain on the sale of a personal asset is taxable income on your 1040 income tax return. You can call them what ever you want. When you read the tax form instructions they do not say realized capital gain or unrealized capital gain.
Capital gains are taxes that you pay on profit as a result of selling an asset. Usually you reconcile these when you do your IRS tax returns. You get a credit for the co…st of the house (and improvements), land, stocks or similar item (the "cost basis") and so just pay income tax on the remaining amount (the profit). Certain taxes on capital gains are also capped at a lower rate than the highest rate of tax on personal income. For example, if you owned the property for more than one year, you would calculate the tax based upon the "long-term" capital gains rates. Check out irs.gov for more information.
Unfortunately, gold is considered a "collectible" and is taxed at the 28% rate. Harry Reid of (D) Nevada is constantly introducing and trying to pass legislation to… change that, making Gold like any other investment. Call your Senators and Congressmen to advocate for this issue.