When you are looking at your tax return, be sure to review the Qualified Dividends and Capital Gains Worksheet. You can also see the blank worksheet in the 1040 instructions, page 36. This will show you how the rates change as the complete tax is computed with the special rates.
Your capital gains, for those transactions that are considered held long term, are taxed at different rates determined by income level and depending on your personal income tax rate.
- Long term is a holding period of more than one year and receives capital gain tax treatment (0%, 10%, 15%, 20% depending on your regular rate of tax)
- Short term is a holding period of one year or less and receives ordinary gain tax treatment (your regular rate)
2020 Income tax rates and income levels by filing status can be found using the link below.
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