Capital Gains Taxes Explained: Short-Term Capital Gains vs. Long-Term Capital Gains
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- Опубликовано: 2 ноя 2023
- One of the main ways to profit from investing is to buy assets at one price and then sell them at a higher price. These types of profits are known as capital gains. As with most kinds of profits, they're subject to taxes. There are two types of capital gains: short term and long term. Taxes can impact the growth of your portfolio, so it's important to understand how capital gains taxes work and learn some strategies that could potentially minimize them.
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Hello, if holding a stock longer than 1 year, and after that you sell, will be taxed at 15% long term capital gain. If sold in april 2024, with a sizable capital gain, do we need pay 15% taxes in this 2024 year or can wait till 2025 income tax filling ? will this incur a penalty tax?
Hello and thank you for reaching out. While we can only offer limited support through social media, our specialists are happy to assist. To discuss your concern with a broker, please call 800-435-4000 or initiate a secure chat session on Schwab.com, available 24/7. ^CH
You pay 2024 taxes in 2025. Any trades in 2024 will be paid in 2025. Tax penalties are weird: basically, you're supposed to make estimated payments quarterly, but this is usually accomplished via your W-4 paycheck tax withholding. It's tricky because the penalty ultimately depends on how much tax you owe come 2025, which some people won't know until 2025 (considering extra income and deductions). In summary, the IRS doesn't make it easy. Personally, I would recommend not screwing around with making quarterly payments, and just pay the small penalty come tax season (if you even end up having a penalty).
When u pay long term capital gains on an asset u have sold is that compounded on top of current tax bracket ( ex 22%) for total of 37%?
Hello and thank you for reaching out. While we can only offer limited support through social media, our specialists are happy to assist. To discuss your concern with a broker, please call 800-435-4000 or initiate a secure chat session on Schwab.com, available 24/7. ^CH
No, long term capital gains are separate and they pay their own 15%. Think of it like a completely separate bucket of income/taxes. It's confusing because when you complete your 1040 tax return, it looks like the capital gains are added to your AGI which is used to calculate your taxable income. However, if you do the calculations, you will see that the capital gains are still taxed at 15%.
Question, if I have a reoccurring investment going for 5 years and its still going at the end of when I sell, will I get taxed for the whole as a short term investment or some as part of long term investment and short term, just curious
There are a couple of initial points that need to be considered. First, the type of investment you're making can effect the tax treatment. Next, if you're investing in equities then investments held for more than one year will be taxed at a long-term rate, less than a year at a short-term rate. So, with equities you'd likely have a combination of long and short-term tax rates when you sell. ^MF
What if I have capital gains on several trades, and capital losses on several others? Do I pay taxes on all the winning trades? Or only on the net gain for the year?
Hello and thank you for reaching out. While we can only offer limited support through social media, our specialists are happy to assist. To discuss your concern with a broker, please call 800-435-4000 or initiate a secure chat session on Schwab.com, available 24/7!
You don't pay taxes if you are net negative you don't pay taxes on the winnings if you lost the same amount
You only pay taxes on a net gain, not a net loss. The net is determined by subtracting your yearly losses from your yearly gains. If you have a net loss, you can only write-off $3,000 per year and the rest will be suspended (saved) to write-off in future years.
So if i decided to sell all of my snp500 etf that i was holding for 20 years (i was buying one stock everymonth) how do i calculate the capital gains of that sale
Consult your own tax advisor for that information. Your situation may be different from others, so it's best to talk with a tax advisor who also has knowledge of trading and investing. ^BW
So what happens if I hold 100 ABC stocks for over a year, then add 1 ABC stock and sell 1 ABC stock a week later. Would the profit from the sell of 1 ABC stock be considered long or short term capital gain?
For Schwab clients, the first-in, first-out (FIFO) method is the default for all securities, except mutual funds. So for your question, by default it would be a long term capital gain. However, be sure to confirm with Schwab directly: 1 (800) 435-4000. ^MF
Long term on 100 shares short term on one share
Why is taking a loss to lower tax a strategy? Your offsetting dollar to dollar so net loss is the same whether I cut a check to IRS or sell at a loss. What am I missing?
Let me give you an example. You bought 100 shares of stock A at cost of $100 each. The stock went south to $80 each. If you sell the stock and realize the loss of $2000, you can lower the tax you have to pay. Later you can buy the stock back at $80, so you still own the same 100 shares of stock A, but you pay less tax for that year. The cons are now the stock cost at $80 so you may have to pay capital gain later if it goes back to $100.
The strategy is used to offset capital gains with capital losses, reducing the overall tax liability. When you sell an investment at a loss, you can use that loss to reduce your taxable income, which can lead to a lower tax bill. The strategy can be useful when you have realized capital gains that you need to offset. ^MF
So long term gain tax is independent of regular w2 income ? Per say my w2 is 100k and then my long term tax gain is 30k ... I will not pay any tax on the capital gain
Yes, long-term capitial gains tax on eqiuties is different from regular income. For other questions that are more specific to your account(s), please contact Schwab at 800-435-4000. ^MF
They are independent. However, your capital gains tax rate is BASED on your regular income. Therefore, you will pay 15% capital gains tax on the $30K.
I started investing 2 months ago and made around 100k in call options in gme and didn't know about this. Im regarded 💀
Just use turbo tax to calculate how much you owe.
Hello, if u keep stocks for let's say 20 years and never sell, and right before selling u move to Belgium for example where u don't pay capital gains tax. Is that possible to avoid paying capital gains?
While we can only offer limited support through social media, our specialists are happy to assist. To discuss your concern with a broker, please call 800-435-4000 or initiate a secure chat session on Schwab.com, available 24/7. ^CH
Probably not if you lived in the US when you bought the stock. I'm not an accountant but I did stay at a Holiday Inn Express last night!!
@@joeking19 a haha haha haaaaa fucking geek
So basically you're screwed anyway it goes and then they wonder why Americans can't get ahead😮😢
Here's a question I invested my money in the penny stock that's very bullish so what happens if I make a couple million off capital gains and refuse to pay it you know I go on a run like Charlie Sheen and spend it all then quit my job and become homeless live with a friend and have no assets what would happen 10 million dollars worth of stocks I'm not giving the government 50% of it f that I'd rather spend it like Charlie Sheen and have fun and then just own nothing for the rest of my life and hell if I get to retire in a jail that's fine free food free bed to sleep. Don't tell me prison food is crap there are starving Africans that give their lives to have the Canadian ship prison food. So once again what would happen if I make 10 million on stocks and then I spend it all😊
Consult your own tax advisor for tax advice specific to your circumstances. ^BW
If I made a million long term but only took out 100 thousand. How much do I owe in taxes and what was taxed?
Hello and thank you for reaching out. While we can only offer limited support through social media, our specialists are happy to assist. To discuss your concern with a broker, please call 800-435-4000 or initiate a secure chat session on Schwab.com, available 24/7. ^CH
You only pay taxes on the gains of what was sold. Your capital gains tax rate is based on your taxable income. If you sold $100K, determine how much gain that was, for example $90K. Most people fall into the 15% bracket, so you would owe $13.5K.
Who have been the beneficiaries of 50% Capital gain tax? The real estate investors; not the people who buy homes to live. The stock/ crypto traders, who have no real contribution to the economy; the commodity traders (via Asset backed securities and Exchange traded funds) who priced out the real users of those commodities. Think about the thousand of families who have to buy gold for their children's marriage in India and elsewhere. They can't buy gold anymore because the speculators (so called investors) who bought Gold ETFs artificially inflated the Gold price. This whole system is a scam and must be done away with. The first step is tax Capital gain 100% like any other income. Well done Trudeau!
2:23 what??? Why is the $82k income going into the $45k tax bracket bucket? This infographic makes no sense to me.
You get taxed at 10% for 9,875 of the 82,000. Get taxed at 12% for 30,250 of the 82,000. Then get taxed at 22% for 41,875 of the 82,000. Short-Term capital gains are additional income meaning the IRS sees your income as 82,000 + 12,000. This means the additional income is taxed at 22% since the previous buckets are full.
You pay the rate up to the amount in that bracket. So the first 9,875 of your 82,000 is taxed at 10%. The next 30,250 is taxed at 12% and the rest of the initial income is taxed at 22%.
@@jumper163 Ahhhhh gotcha! Thank you 🙏
Not understanding how the tax brackets actually work is why most people complain about the tax system. Honestly, we should be using a VAT system, but the larger corporations don't like that because there's no "loopholes" to duck your liability into. Secondly, the personal tax services economy in the US is so f*cking large (billions of dollars of essentially wasted economic resources) HR Block, Jackson Hewitt, etc...don't want any wind of that.
With that said, you can find what the tax brackets are and you apply that to the appropriate "bucket" or "tranche" of your income. (This is why maximizing your deductions is very important, since you can keep some money out of those buckets so that hopefully you'll land yourself in a substantially lower income bucket at the end, thus reducing your liability). Mind you, this is just federal income tax rate and doesn't take into consideration Social Security (I think capped at your first $160k, but talk to your advisor as I'm not liable being some "random" on the internet), state income tax and medicaid/medicare. If you're unsure, look at what the maximum bracket is, if you're making more than the minimum of the largest bracket, add that to the largest state income bracket (if you have state income tax), then squirrel away at least that amount of your profits away for tax and you'll *probably be fine* . I generally do 50% just because it's easy and generally covers my tax liability as well as gives me a small tax return at the end of the year.
@@ryanshannon6963 Thanks for your reply. I did actually know about paying at the separate rates until you get to your bracket, but evidently my brain pushed the information back out again. Fortunately I'm Australian, so I don't have to deal with separate federal taxes, or Social Security, but I am a freelancer and filing for yourself can get pretty complex. Consequently I have some amazing accountants, who I'm incredibly grateful for.
Ohhh man ...1st law of thermodynamics...no one on Robinhood's laughing now😢
Here is a brain teaser. True or False? At a certain income level, generating additional income as long term capital gains cost more in tax than generating the same additional income in short term capital gains or ordinary income.
It never happens. All long term capital gain tax bracket are lower than income tax bracket.
Ah ha. In fact it does. If your married filing joint and your income is $94,050 the next $250 of income will be taxed at 15% for long term cap gain but only 12% for ordinary income or short term gain. Above $94,300 would then be 22%.
@keithmachado-pp6fv If your marginal tax rate is in the 10% or 12% income tax bracket, long-term capital gains and qualified dividends are taxed at 0% (not 15%). Ordinary rates are always the same or more than capital gain rates.
Joe that is not correct. Reread my explanation. The zero cap gain bracket ends at $94,050 for married filing jointly and the 12% ordinary income bracket goes to $94,300, therefore if you have $90k of ordinary income and $4,050 of capital gains and add $250 of ordinary income or short term gain or non qualified dividends you are still in the 12% bracket but if you add $250 of long term cap gains or qualified dividends they will be taxed at 15%. Look up the IRS tables.
All theft...
Hey politicians have to pay for their hookers and cocaine somehow
to me it a waste time to invest lose all in taxes
Even if you pay taxes on some of it you still make some too. S&p 500 has gone up 830% in past 30 years or so
That's why you're poor
@@datguy729 to their point, why let something else do all the working for you when you can wake up, *every morning*, work an 8 hour shift for a paycheck. Take a 1 hour break. Work *another 8 hour shift for a paycheck*. Then go home, eat, ideally bathe, sleep and do it all over again for the rest of your life?? I pay less taxes *and* I know I'm making money because I worked for 16 hours yesterday!!!
*why in the world* would I want to do something nearly completely passive, and reap dividends/returns when I come to a situation in life that makes it appropriate to withdraw with minimum to no tax penalty, such as buying a house or paying for education?
The *ONLY* book and education I need, sir, is The Bible! If it ain't in there, you don't need to know it!
So invest in a roth ira and grow your money and withdraw tax free
@@datguy729😂 true