clarification on capital gains rates needed
I'm trying to do some tax planning and somewhat confused
about capital gains taxes relating to short term and long
term gains. If I'm in the 32% bracket and have 20,000 in
short term gains, and 100,000, what will be the effective
tax rate(s) on those capital gains? I am doing a preliminary
Schedule D, and part 4 seems very confusing. I'm trying to
approximate how much I will need to put aside for my tax
bill for the above long and short term gains. I was under
the impression there are different maximum tax rates for
both short and long term stock gains. Any help will be
greatly appreciated!
Short-term gains are treated the same as ordinary income. So
if you're in the 32% bracket and you have $20,000 in gains
and you do not have a long-term capital loss (either you
have $-0- long-term gain or a net long-term gain), put aside
$6,400 (32% x $20,000). Long-term gains (generally) are
taxed no higher than 20%.