Capital Gains tax question.

I have a couple of questions about capital gains tax. Googling just confuses me as to the current status.

I am in the 15 percent income bracket.

If I should have a long-term capital gain of $150,000 from a sale of stocks, what would be the tax rate? It looks to me as though it might be 15 percent, ten percent, or perhaps even zero.

The same questions apply if I should have this much gain in 2012 instead of this year.

As I understand it, for long-term capital gains if you are in the 15% bracket the capital gains tax rate is 0% through 2012. It would revert to 10% should be Bush-era tax cuts expire at the end of 2012.

If you work through the form, that is only true to the extent that the capital gains are within the 15% bracket, which goes up to $34.5K for a single. So, if KlondikeGeoff was making $25K, the first $9500 in capital gains would be taxed at 0% and the rest would be at 15%.

Baracus got it. Income is in brackets, people are not in brackets. Also, the 15% rate goes up to 20% for gains realized on or after January 1, 2012 (I don’t know if the 0% rate is affected, but I strongly suspect it is not).

I think that should be January 1, 2013.

Yeah, that’s right, thanks.

Thanks guys.

As we file jointly, I am definitely in the 15% bracket, so am delighted to learn that my gains will be taxed at the rate of zero percent for this year and next year.

Who instigated this? That horrible, wicked George Bush. :smiley:

You might want to read through the thread again (particularly Baracus’s post)–what you say above is only true depending on the amount of the gains.

If you have 150k in gains, you won’t be in the 15% bracket and some of the gains will be taxed. Check the math done by Baracus.

Also, I thought I’d add a little clarification just to make sure we’re all using “capital gains” the same way. The gain represents the sale price minus your cost. Many people who sell stock forget to subtract basis and assume the whole sale price is a gain. If your sale is for $150k and you paid $50k for the stock originally, your gain is only $100k. You may already know this, but I’ve learned not to assume it.

So where does the “half the tax rate on capital gains” come in? I assume you are saying your marginal tax rate for wages is in the 15% bracket.