We'll have $100K income in 2013, and $50K is our salary and $50K are capital gains ($20K is short term capital gain and $30K is long term). Since the tax rate changes at $72,500, what is the best way to estimate our taxes? Should we do salary + ST capital gain first, then add the LT on top? Or vice versa (salary + LT gain, then add ST gain)? Thanks in advance for your reply.
Salary + ST capital gain first. Then subtract your deductions (itemized or standard) & exemptions.
Then subtract that number from $72,500. The difference will be how much of your LTCG are taxed at 0%. The rest will be taxed at 15%.
So, based on what you said and assuming the standard deduction and 2 exemptions (no kids):
50,000 salary
+20,000 STCG
- 12,200 Standard deduction
- 7,800 two exemptions
= 50,000 "ordinary" taxable income
72,500
- 50,000
22,500 Long term capital gains not taxed (taxed at 0%)
30,000 total LTGC
-22,500
=7,500 LTCG taxed at 15%
None of your income will be taxed at more than 15%, because your ordinary taxable income is less than $72,500.
See the "Qualified dividends and capital gains" work sheet in Turbotax for detailed calculations
Salary + ST capital gain first. Then subtract your deductions (itemized or standard) & exemptions.
Then subtract that number from $72,500. The difference will be how much of your LTCG are taxed at 0%. The rest will be taxed at 15%.
So, based on what you said and assuming the standard deduction and 2 exemptions (no kids):
50,000 salary
+20,000 STCG
- 12,200 Standard deduction
- 7,800 two exemptions
= 50,000 "ordinary" taxable income
72,500
- 50,000
22,500 Long term capital gains not taxed (taxed at 0%)
30,000 total LTGC
-22,500
=7,500 LTCG taxed at 15%
None of your income will be taxed at more than 15%, because your ordinary taxable income is less than $72,500.
See the "Qualified dividends and capital gains" work sheet in Turbotax for detailed calculations
Excellent post. In my previous comment, I neglected to factor in that the tax rates are on "taxable income" rather than AGI.
Hi I am in the same boat as this person, but here's my scenario:
40000 LTGC
-32200 losses from my business
-12200 Standard deduction
_________
=20000 Long Term capital gains not taxed (taxed at zero)?
(1) given the above, it appears I pay no tax on the $40k LTCG, correct?
(2) I have TurboTax, but where would I enter this manually? I assume the Schedule D Tax Worksheet, which is not filed with the IRS?
Thank you.
Correct. Actually even less. You subtract an additional $3900 for each exemption. Bottom line: you will owe no tax, but you still have to file a tax return
Help - 2018 MFJ with $44k income and $200k LT Cap Gains (liquidated assets in 2018 to build house and move; then sell original house (Jan 2019) and reinvest proceeds) what is your estimated tax liability?
As Sweetie Jean said, the tax tools will make is easiest for you.
EDIT: See Hal_Al's comment for precise calculations.
Updated link SJ [add a / at end to see if that will work]
<a href="https://turbotax.intuit.com/tax-tools/calculators/taxcaster/" rel="nofollow" target="_blank">https://turbotax.intuit.com/tax-tools/calculators/taxcaster/</a>
<a href="https://turbotax.intuit.com/tax-tools/" rel="nofollow" target="_blank">https://turbotax.intuit.com/tax-tools/</a>
I could not get a good page from your link.
Hi I am in the same boat as this person, but here's my scenario:
40000 LTGC
-32200 losses from my business
-12200 Standard deduction
_________
=20000 Long Term capital gains not taxed (taxed at zero)?
(1) given the above, it appears I pay no tax on the $40k LTCG, correct?
(2) I have TurboTax, but where would I enter this manually? I assume the Schedule D Tax Worksheet, which is not filed with the IRS?
Thank you.
In TurboTax (TT), enter at:
- Federal Taxes tab
- Wages & Income
- Explore on My Own
Scroll down to:
-Investment Income
-Stocks, mutual funds, Bonds, Other
TT puts it on form 8949, which then carries to schedule D. Form 8949 is relatively new.
Turbotax has a support article (first link) and a tax calculator for different scenarios(second link)
New links
72,500
- 50,000 (is this 50k income or combined capital gains?
22,500 Long term capital gains not taxed (taxed at 0%)