Short Term & Long Term Capital Gains Tax

June 2nd, 2008  |  Published in Investing  |  4 Comments

When it comes to taxes, it makes a big deal how long you’ve held your investments. If you’ve held your investments for over a year before selling, you are taxed at the long term capital gains tax. If you’ve held them for less than a year before selling, you’re taxed at the short term capital gains tax. The two tax rates are very very different.

To calculate how much your tax is, you first have to figure out which tax bracket you’re in. Here are the 2008 tax brackets.

Short Term Capital Gains Tax

This is easy, your gains are taxed at your tax rate as ordinary income.

Long Term Capital Gains Tax

If you are in the 10% and 15% tax brackets, you pay 0% in long term capital gains tax. If you are in the 25%, 28%, 33% or 35% tax brackets, you will pay 15% on your long term capital gains.

By waiting a full year, you can save quite a bit on capital gains taxes… but don’t let tax considerations by your main reason for buying or selling stocks. You’ll get yourself in deep trouble that way. 🙂

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The Carnival of Personal Finance is now available at Mpolanomy, my TradeKing review was included.

  

Responses

  1. 16th Carnival of Money Hacks — Daily Money Hack says:

    June 9th, 2008 at 11:47 am (#)

    […] presents Short Term and Long Term Capital Gains Tax posted at My Retirement […]

  2. ZZZ says:

    June 26th, 2009 at 9:18 am (#)

    What about short-term capital gains in a Roth IRA?

  3. retirehappy says:

    July 1st, 2009 at 11:44 am (#)

    No such thing, the earnings aren’t taxable anyway so there is no capital gains tax.

  4. Matt Call says:

    November 15th, 2009 at 8:02 am (#)

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