What is Capital Gains Tax and how do I know if I have to pay that Tax and how much I will have to pay on that Tax?

Your resident state taxes all of your income.   If you have income in another state, you pay tax on the income sourced in the nonresident state.   Your resident state will give you credit for taxes paid to a nonresident state.   

 

When you sell a capital asset such as a home, you generate capital gains or losses.  When you sell a capital asset, the difference between its cost basis and the selling price results in a capital gain or loss.

 

Your total capital gains for the year minus your total capital losses results in either a net capital gain or a net capital loss.

 

• Short term capital gains (gains on assets held one year or less) are taxed as ordinary income, as high as 37% in 2023 and 2024.
• Long term capital gains (gains on assets held more than one year) are taxed at a more favorable rate than ordinary income, at either 0%, 15%, or 20% for 2023 and 2024.
• Net losses are deductible, but only up to a maximum of $3,000 ($1,500 if married filing separately). Any capital losses you couldn't deduct this year can be carried forward and deducted on future tax returns. This is called a capital loss carryover.

A capital loss is a loss on the sale of a capital asset such as a stock, bond, mutual fund or real estate and can typically be used to offset other capital gains or other income.

 

Guide to Capital Gains Taxes

5 Things to Know About Capital Gains Tax