What does tax bracket mean in terms of longterm capital gains? Is this referring to job wage income? And what is net investment income tax? Is this wages or capital gain

[stephaniemoore89]

In 2017, if you can establish that you worked and lived in NV as a resident. Prior to the sell of a home in CA. You're not responsible for taxes at the federal level. But you are responsible for taxes at the 13.3% CA state level. If longterm taxable capital gains are $551,000 and over. If it's not at or over the threshold upon applying the tax exclusion. Then longterm capital gains would default to 0. And you will owe nothing - correct? If I'm inaccurate would the amount owed be under 13.3%? My question is what is owed if the longterm capital gain tax is under $551,000?

[DMarkM1]

No.  A few items at play here.  

1. If NV residency is established you pay CA tax only on CA sourced income which would include the sale of a CA home.
2. Back in 2017, as now, there is/was an exclusion of up to $500,000 of gain on the sale of a principle residence for joint filers.  The rules are the same as at the federal level.  If you lived in and owned the home for at least 24 months in the last five years prior to the sale, you can exclude up to $250,000 of gain (500,000 for joint filers if both meet the criteria).  
3. CA does not have a capital gains tax.  They tax all income at ordinary rates.  In other words capital gains are just part of total income. 
4. CA, just like at the federal level, taxes marginally.  Only the part of income that exceeds each level is taxed at the next level.  For example, below are the 2017 CA tax brackets for single filers.  (Joint filers just double the income at each level)

NOTE:  If you need, the 2022 CA tax brackets are below the 2017 brackets for reference.

For a total taxable income of 8,500  Income is taxed as follows: up to 8,222 is taxed at 1% and from 8223-8500 is taxed at 2%. So with that in mind only the part of income over 551,473 would be taxed at 12.3%.  Only the part of income over $1M is taxed at 13.3% 

Keep in mind items 1 and 2 above.  This is all taxable income including any taxable capital gains.  If you qualify for the home sale exclusion then that amount is not part of total taxable income. 

2017

Tax Bracket                                 Tax Rate

$0.00+                                            1%

$8,223.00+                                     2%

$19,495.00+                                   4%

$30,769.00+                                    6%

$42,711.00+                                    8%

$53,980.00+                                   9.3%

$275,738.00+                                10.3%

$330,884.00+                                11.3%

$551,473.00+                                12.3%

$1,000,000.00+                             13.3%

2022 California Income Tax

Single / Filing Separately                   Tax Owed

1%                                                           $0 to $9,325                       1% of taxable income.

2%                                                          $9,326 to $22,107               $94 + 2% of the total > $9,325.

4%                                                           $22,108 to $34,892            $349 + 4% of the total > $22,107.

6%                                                           $34,893 to $48,435            $861 + 6% of the total > $34,892.

8%                                                           $48,436 to $61,214           $1,673 + 8% of the total > $48,435.

9.3%                                                        $61,215 to $312,686         $2,696 + 9.3% of the total > $61,214.

10.3%                                                     $312,687 to $375,221       $26,083 + 10.3% of the total > $312,686.

11.3%                                                     $375,222 to $625,369        $32,524 + 11.3% of the total > $375,221.

12.3%                                                     $625,370 or more              $60,790 + 12.3% of the total > $625,369.

[stephaniemoore89]

Hi Mark,

What do you mean by if you qualify for the home sale exclusion then that amount is not part of total taxable income. Basically, I didn't have wages from a job in 2017, to count towards ordinary income. And I left CA prior to the house being sold. NV became my residence where I worked and lived. So, I suppose longterm capital gains was the only source of ordinary income in the state of CA.

I thought that once a sale exclusion was applied to capital gains from sell of a home.  The remaining amount would be categorized into a tax % bracket based on income amount. And taxed at 13.3% as ordinary taxable total income if amount was over $551,000. However, after all deductions were applied for singles using the $250,000 exclusion. Longterm capital gain amount total was $530,000. Would an income bracket be used on this capital gain as ordinary income or not? If so, what would it be? And what tax rate would this amount be taxed at in 2017? As a reference, what information chart or table are you using to determine percentage rate and tax brackets on longterm capital gains? Where can I find a 2017 tax chart regarding rates and tax brackets on the IRS website? Thanks

[JohnB5677]

What do you mean by if you qualify for the home sale exclusion then that amount is not part of total taxable income.

• The amount of gain excluded from gross income with respect to any sale or exchange of a principal residence is limited to $250,000.
• In the case of a husband and wife who file a joint return for the tax year of the sale or exchange of the property, the $250,000 limitation (described above) that applies to the exclusion of gain from the sale or exchange of a principal residence becomes $500,000
• CA Sale of a Principal Residence Page 2

I thought that once a sale exclusion was applied to capital gains from sell of a home.  

• Yes, the exclusion is applied prior to calculating the tax.

The remaining amount would be categorized into a tax % bracket based on income amount. And taxed at 13.3% as ordinary taxable total income if amount was over $551,000.

• No it will not be taxed at a flat rate of 13.3%
• California taxes capital gains at the same rate as regular income. In turn, any money earned in a year from investments will simply be added to the person's taxable income. 
• No, you do not pay a flat 13.3% on your home sale.

Would an income bracket be used on this capital gain as ordinary income or not? If so, what would it be? And what tax rate would this amount be taxed at in 2017?

As a reference, what information chart or table are you using to determine percentage rate and tax brackets on longterm capital gains?

• Using the table provided by @DMarkM1 
  • $0.00+                                            1% The first $8,223 is taxed at 1%.
  • $8,223.00+                                     2% From $8,223.01 to $19,495 is taxed at 2%.
  • $19,495.00+                                   4% From $19,495.01 to $30,769 is taxed at 4%.
  • $30,769.00+                                    6% And so on.

Where can I find a 2017 tax chart regarding rates and tax brackets on the IRS website? 

• It is not on an IRS website, it is California.
• The website below has the same info as provided by @DMarkM1, but in a table form.  if you scroll down to your taxable income number it will give you the proper tax.
• CA 2017 Tax Table for 540 Tax Return

[stephaniemoore89]

What are the benefits of reporting California-source income as a non-resident? I just want to know if there are any advantages of  being a resident in Nevada during 2017, before the sell of a home in CA? Does that mean that I'm still responsible for paying both 23.8% plus 13.3% on longterm capital gains?

I moved and worked in Nevada in 2017, 2-3 months prior before the house sole in CA. I filed my taxes in NV, which establishes my residency. Am I suppose to combine both my wage earnings in NV along with the longterm capital gains from the sale of the home in CA?

If so, does the cumulative total include wage income in (NV) and longterm capital gains in (CA)? Which must be $551,000 and over to be taxed at 13.3%? 

Longterm Capital Gains from the home was $530,000. And I didn't have any wage income in 2017. I met the requirement for singles and applied the $250,000 exclusion. The gains are under $551,000 and from the 2017 chart income in CA, should be taxed at 11.3% and not 13.3% - correct? Would I also be responsible for the 23.8% based on income bracket of the longterm capital gain at $530,000?

This is where I'm confused at when it comes to calculations. And would like to know if being a resident would offset the 23.8% because of my residency in NV. And would that mean I would only owe the 11.3%. 

[Critter-3]

What are the benefits of reporting California-source income as a non-resident?  NONE ... the sale of the CA property is taxed by CA ... there is no way around it.  Becoming a NV resident is immaterial to your situation.