Welcome Guest. Register Now!  


For 2014 Tax Tips For Year 2014.


Reply
 
LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 11-27-2014, 01:12 PM
Junior Member
 
Join Date: Nov 2014
Posts: 3
short term capital gains question

So I'm a little confused about short term capital gains. From what I've read you are taxed at the same rate as your ordinary income. So for example as I understand it if you were single and made $50,000 a year working for Delta Airlines and made $500 profit in short term capital gains you would pay 25% or $500*0.25=$125 to the IRS leaving you with a $500-$125=$375 profit from your investments after taxes.

But here is my question. What if you were totally unemployed for a whole year (every single day) and collected no unemployment benefits whatsoever from the government, but instead earned enough money to get by solely from short-term capital gains investments? Let's say you made $50,000 in total profits over the course of the year from short term capital gains investments, but that you didn't make enough trades to qualify as a trader. How much taxes would you owe on this investment? Since you didn't have a job would your ordinary income be considered $0 and would therefore fall into the 10% tax bracket such that you would owe $50,000*0.10=$5,000? Or would the $50,000 earned from your short term investments be considered part of your ordinary income in which case you would fall into the 25% tax bracket and would owe $50,000*0.25=$12,500? How would this work?



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #2 (permalink)  
Old 12-01-2014, 02:51 AM
Moderator
 
Join Date: Oct 2010
Posts: 5,230
________________________________________
So I'm a little confused about short term capital gains. From what I've read you are taxed at the same rate as your ordinary income.==correct, as ordinary gain that is not subject to preferential tax rates on long term capital gains;0% aslongas your marginal tax rate is 15% or lower , or 15% if your tax bracket is 25% or higher, or 20% if your tax rate is 39.6% for 2013.



So for example as I understand it if you were single and made $50,000 a year working for Delta Airlines and made $500 profit in short term capital gains you would pay 25% or $500*0.25=$125 to the IRS leaving you with a $500-$125=$375 profit from your investments after taxes.========>>>>>>>As mentioned above.it depends on your marginal tax rate. Fort accuracy, you may follow instructions on Sch D and the Qualified Dividend And Capital Gains Worksheet

But here is my question. What if you were totally unemployed for a whole year (every single day) and collected no unemployment benefits whatsoever from the government, but instead earned enough money to get by solely from short-term capital gains investments? Let's say you made $50,000 in total profits over the course of the year from short term capital gains investments, but that you didn't make enough trades to qualify as a trader. How much taxes would you owe on this investment? Since you didn't have a job would your ordinary income be considered $0 and would therefore fall into the 10% tax bracket such that you would owe $50,000*0.10=$5,000? Or would the $50,000 earned from your short term investments be considered part of your ordinary income in which case you would fall into the 25% tax bracket and would owe $50,000*0.25=$12,500? How would this work?=======>>>>>in this case, you need to report your short term capital gain as ordinary income whether or not you are a professional trader(in this case, you must report the short term gain on your Sch C/SE), you must report your short term capital gain as ordianry income on your 1040 line 13 as part of your gross income/agi. So, you need to total your entries on Form 8949 and then transfer the information to the appropriate short-term sections of Sch D line 7,16, . then, you need to file Qualified Dividend And Capital Gains Worksheet for your tax liability.On that tax schedule you'll subtract your basis from the sales price to arrive at your capital gain or loss.STCG is NOT subject to preferential tax rates on long term capital gains. So,there is no fixed percentage. The percentage is higher if you have more income and lower if you have less income. Unless you can be claimed as a dependent by anyone else, then you can earn several thousand dollars without being required to pay any income tax due to your std deduction /personal exemption up to $10K for 2013.If you can be claimed as a dependent by someone else, then your std dedcution as a dependent, only $1K(this amount changes from year to year) is tax-free



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
Ads
Reply


Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Do K-1 Losses offset Short Term Capital Gains? jvc714 For 2014 1 11-26-2014 03:40 AM
Accidently misclassified a capital gains transaction as short term rather than long term janelee Capital Gains 1 04-17-2014 06:50 AM
Capital gains question Neens27 Itemized Deductions 1 11-18-2013 11:34 PM
Long term capital gains rate for active trading LLC lukedog Limited Liability Company 1 09-22-2012 04:52 AM
Capital Gains on a Short Sale? 99980000 Capital Gains 0 04-08-2009 10:20 AM

Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 
Individual
 » Income
 » IRA/Sep
 » Medical
 
Corporations
 » Payroll
 
Forum for CPAs
 
Financial Planning