capital gain and standard deducation

[dgmsa707]

1) I have over $95,000 in capital GAINS from the sale of stocks in 2022.  I also  have $30,000 LOSS from the sale of crypto currency.  Does that mean that I will be taxed at 15% on $65,000 long term capital gain (90-30=65)?

--- Is there any way to postpone paying part of the $65,000 in capital gains till 2023 tax year?

2) What is the standard deduction for a single person  for 2022 tax year.

3) I am retired.  Are there any strategies / ways I can reduce my taxes (since I do not have any write offs from running my own business)?

4)  What are the rules regarding making sure that I am not fined for paying too little in quarterly estimates (because I have sold a lot of stocks this year and have high capital gains). 

----If I pay 100% of the taxes owed last year does that protect me this year?

---How can I figure out what to pay next year in quarterly estimates since I will not be selling a lot of stocks and my long term capital gain issue will no longer be a problem.

----I need to understand how to figure out how much I need to pay in quarterly estimates - is there a description somewhere on how to figure this out?

[KochuK]

Hi dgmsa707, thanks for attending the event and posting questions.

To reply,

1) Crypto trading is considered capital assets. You should be able to net Crypto loss against the stock trading. 

In 2022, the 0% rate applies for individual taxpayers with taxable income up to $41,675 on single returns ($40,400 for 2021), $55,800 for head-of-household filers ($54,100 for 2021) and $83,350 for joint returns ($80,800 for 2021).

The 20% rate for 2022 starts at $459,751 for singles ($445,851 for 2021), $488,501 for heads of household ($473,751 for 2021) and $517,201 for couples filing jointly ($501,601 for 2021).

The 15% rate is for filers with taxable incomes between the 0% and 20% break points.

The calculation is by "Qualified Dividends and Capital Gain Tax Worksheet - line 16" on page 35 of below link.

https://www.irs.gov/pub/irs-dft/i1040gi--dft.pdf

Depending what is your total taxable income, the long term capital gain tax rates could be 0%, 15%, 20% for you. There is no postponement of capital gain, unless you have other capital loss to offset the gain.

2) Standard deduction for 2022:

The standard deduction amounts were increased for 2022 to account for inflation. Married couples get $25,900 ($25,100 for 2021), plus $1,400 for each spouse age 65 or older ($1,350 for 2021). Singles can claim a $12,950 standard deduction ($12,550 for 2021) — $14,700 if they're at least 65 years old ($14,250 for 2021). Head-of-household filers get $19,400 for their standard deduction ($18,800 for 2021), plus an additional $1,750 once they reach age 65 ($1,700 for 2021). Blind people can tack on an extra $1,400 to their standard deduction ($1,350 for 2021). That jumps to $1,750 if they're unmarried and not a surviving spouse ($1,700 for 2021).

3) You mentioned "running your own business. " Please study below links for business expenses of any potential write-offs.

 Schedule C Profit or Loss From Business and its instructions

https://www.irs.gov/pub/irs-pdf/f1040sc.pdf

https://www.irs.gov/pub/irs-pdf/i1040sc.pdf

4) Quarterly estimated tax payments 

Please refer to page one “General Rules” and “Higher income taxpayers”

2022 Form 1040-ES

https://www.irs.gov/pub/irs-pdf/f1040es.pdf

IES Estimated Tax FAQs

https://www.irs.gov/faqs/estimated-tax

Since you have large capital gain in 2022, you make sure that you pay in 100% (or110%) of 2021 tax liability for tax year 2022 to not to incur underpayment penalty when filing tax return in 2023.

You do not anticipate large capital gain, then please estimate 2023 tax liability and paid in 90% for tax year 2023 to not to incur underpayment penalty when filing return in 2024.

Hope the above helps. Thank you.