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