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? |