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Capital gains is added on top of regular income so if you had $450k regular income then $50k long term capital gains, $38,850 would be taxed at 15% and the rema

Capital gains is added on top of regular income so if you had $450k regular income then $50k long term capital gains, $38,850 would be taxed at 15% and the remainder at the top rate of 20%

yebyen 8y ago
Thanks for explaining it clearly. I hate to ask for more, but it's a rare opportunity that my question about capital gains is not completely off-topic. Can you (or anyone) tell in a similar idea about how Capital gains losses work? I understand that there is a limit to how much loss you can claim against your gains in the coming year, and that you can claim the loss as a deduction in following years up to a limited number of dollars each year, and limited number of years, but what I don't know is what the losses can be claimed against. If I have capital losses this year, and I'm getting a refund this year for my income withholdings overpayment... then next year say I owe income taxes from underpayment, but I have that deduction from the previous year, can I cancel them out? Or do I need to report a capital gain in the next year in order to be able to "use up" the previous year's loss as a deduction? My understanding is I can't use capital losses to pay income taxes, but I am not a CPA. Perhaps this is a question for my accountant, and this should be a billable conversation, but this is just a question I've had since I started thinking about capital gains, and I've never been able to answer it for myself.
- danzig13 8y ago
  I’m not a CPA or accountant. Investopedia has a few articles on the subject. I think capital losses can completely cancel any capital gains - kind of obvious if you think about it - if you lose $10 on sales of stock A and gain $10 on sales of stock B you had not income from your activities. In addition, you can apply $3,000 in losses to reduce ordinary income (not taxes directly) and carry the remainder to following years. So on sale of stock A you lost $5,000, on sale of stock B you gained $1,000. You can eliminate the gain, have $4,000 left, reduce your taxable income of $100,000 to $97,000 using $3,000 more of the loss, then have $1,000 left over for following years. In the next years I think you can use that loss to reduce gains then income in the same way. Hope I’m right and that is clear.
  - yebyen 8y ago
    Thanks for answering. That is clear, and it makes sense.

Capital gains is added on top of regular income so if you had $450k regular income then $50k long term capital gains, $38,850 would be taxed at 15% and the remainder at the top rate of 20%

yebyen 8y ago

Thanks for explaining it clearly. I hate to ask for more, but it's a rare opportunity that my question about capital gains is not completely off-topic. Can you (or anyone) tell in a similar idea about how Capital gains losses work? I understand that there is a limit to how much loss you can claim against your gains in the coming year, and that you can claim the loss as a deduction in following years up to a limited number of dollars each year, and limited number of years, but what I don't know is what the losses can be claimed against. If I have capital losses this year, and I'm getting a refund this year for my income withholdings overpayment... then next year say I owe income taxes from underpayment, but I have that deduction from the previous year, can I cancel them out? Or do I need to report a capital gain in the next year in order to be able to "use up" the previous year's loss as a deduction? My understanding is I can't use capital losses to pay income taxes, but I am not a CPA. Perhaps this is a question for my accountant, and this should be a billable conversation, but this is just a question I've had since I started thinking about capital gains, and I've never been able to answer it for myself.

danzig13 8y ago
I’m not a CPA or accountant. Investopedia has a few articles on the subject. I think capital losses can completely cancel any capital gains - kind of obvious if you think about it - if you lose $10 on sales of stock A and gain $10 on sales of stock B you had not income from your activities. In addition, you can apply $3,000 in losses to reduce ordinary income (not taxes directly) and carry the remainder to following years. So on sale of stock A you lost $5,000, on sale of stock B you gained $1,000. You can eliminate the gain, have $4,000 left, reduce your taxable income of $100,000 to $97,000 using $3,000 more of the loss, then have $1,000 left over for following years. In the next years I think you can use that loss to reduce gains then income in the same way. Hope I’m right and that is clear.
- yebyen 8y ago
  Thanks for answering. That is clear, and it makes sense.