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yota691

Be Prepared for the Capital Gains Tax Rate in 2014

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Be Prepared for the Capital Gains Tax Rate in 2014

By Chuck Saletta | 
December 19, 2013 | 

If you sell an investment for more than you paid to buy it, that profit is known as a capital gain on your investment. Like ordinary income, the profit you receive is subject to taxes, but at the federal level, the rates are often different from those on your earnings from work. The capital gains tax rate in 2014 depends on your overall taxable income, the length of time you've held the investment, and whether you took offsetting losses to charge against some or all of your gain.

What is the capital gains tax rate in 2014?
While Congress can always change the law, as of Dec. 18, 2013, the expected capital gains tax rates in 2014 for ordinary investments are as follows:

Short-term gains (gains on assets owned for less than one year plus one day) are taxed at your ordinary income tax ratesLong-term gains (gains on assets owned for at least one year plus one day) are taxed depending on your overall income tax bracket. If your overall income falls in:

  • the 10% or 15% marginal income tax brackets, then your long-term capital gains tax rate is 0%.

  • the 25%, 28%, 33%, or 35% marginal income tax brackets, your long-term capital gains tax rate is 15%.

  • the 39.6% marginal income tax bracket, your long-term capital gains tax rate is 20%. 

In addition, the capital gains of high-income earners are subject to a net investment income tax of 3.8%, above and beyond that capital gains tax rate. Those rates kick in at $125,000 if you're married filing separately, $200,000 if you file single or as a head of household, or at $250,000 if you're married filing jointly or a qualifying widow(er) with a dependent child. 

Not all assets fall under standard capital gains treatment. Qualified small-business stock and collectibles carry a maximum 28% capital gains tax rate, and recaptured depreciation is taxed at a maximum 25% capital gains tax rate in 2014. The big break in capital gains tax rates generally comes when you sell your home. If you've owned and lived in your home long enough to qualify, you can exclude $250,000 of gain (or $500,000 if married and filing jointly) from being subject to capital gains taxes.

The benefits of losing money
The other thing to note when it comes to capital gains taxes in 2014 is that you can use losses to offset gains, though you can't claim a loss for your taxes on the sale of your primary residence. 
If you have more losses than gains, up to $3,000 of losses can go to offset ordinary income, and the rest of your losses carry forward to your next tax year. 

Be careful with taking losses, though, because of something known as the "Wash Sale" rule.In essence, if you sell an item for a loss and then buy it or a "substantially identical" item back within 30 days (before or after the sale), you can't immediately claim your loss. Instead, the loss adjusts your basis price and holding date on your new purchase. 

Despite all that complexity, capital gains tax rates in 2014 generally remain lower than ordinary income taxes, especially for assets that you've held for more than a year. Managed well over an entire investing lifetime, your portfolio can give you plenty of opportunity to leverage those lower rates to help your money go further in your golden years.

 

Your reward after a career of paying taxes
After you've completed your career of working and investing while dutifully paying your taxes, it's time to reap the rewards. Social Security plays a key role in your financial security and is one of the most common benefits available to American retirees.

After your lifetime of effort to fund your Social Security benefit, be sure to maximize the value of the payment you get from it. In our brand-new free report, "Make Social Security Work Harder For You," our retirement experts give their insight on making the key decisions that will help ensure a more comfortable retirement for you and your family. Click here to get your copy today.

 
Edited by yota691
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***///

 

Thank you, YerYOTAness for bringing wisdom and information we can use ! :tiphat:

Thanks Ladies...I posted this for a Reason..but I won't get into all that.. :eyebrows: Thanks again Sarge's Ladies... ;) 

Edited by yota691

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Get out your calculators: the debate in Washington over whether to replace low Bush-era tax rates for higher Clinton-Obama rates, has some footnotes for taxpayers (and their tax planners) who have capital gains, or get regular dividend checks in the mail.

If and when taxes on regular income go up for top earners -- whether those earning $250,000/year, or $1 million/year, or something in between -- their taxes on income from owning stocks and other assets will rise too. Capital gains rates are expected to climb from the current 15 percent, to 20 percent. Dividend income will be treated as regular income again, with a top tax rate of 39.6 percent.

“Capital gains are really skewed by income,” says Syracuse University economist Len Burman. He's co-author of the book "Taxes in America." Burman says IRS data shows that more than 90 percent of capital gains go to the top 20 percent of earners. And 16 percent of capital gains go to just 400 super-wealthy taxpayers.

“It is hard to find any other form of income that it is more concentrated at the top,” says Burman. “You have capital gains on assets, and the richest people in our country have most of the assets.”

The pro-business Club for Growth warned this week against any rise in taxes on capital gains and dividends in a potential fiscal-cliff grand bargain. Conservatives argue that lower capital-gains rates encourage investment and economic growth. And they contend that dividends are double-taxed, because corporate profits are already taxed before they are distributed to shareholders as dividends.

But Len Burman counters that when capital-gains rates are low relative to taxes on regular income, wealthy taxpayers often use them to shelter income using shell companies and other exotic financial instruments. As a result, he says they're less likely to invest in productive businesses that create jobs or value for shareholders.

Edited by yota691

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[quo name=yota691" post="1306987" timestamp="1388487701]Thanks Ladies...I posted this for a Reason..but I won't get into all that.. :eyebrows: Thanks again Sarge's Ladies... ;) 

Awe come on buddy you can't just drop a delicious crumb of Velvet cake like that

and walk away. LOL

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Everyone should do some IRS research on this matter. From what I've read "CASH MONEY" is not considered an investment model unless via a markets/futures/stock defined transaction. You may 'Feel' it is or was an "INVESTMENT",  but the IRS has no feelings.

CASH MONEY in an EXCHANGE Transaction is considered an ORDINARY INCOME TRANSACTION where one simply subtracts the acquision cost from the exchange value and reports the net (after fees, bank charges and fed exchange tax) overage/profit  as ORDINARY INCOME. If you lose $$, sorry Charlie, no credit on CASH MONEY transactions tax wise.  

Transactions of $10,000 or more (individually or cumulative acts) will require a FINCEN 104 form(s) to report all the transactions. IT will be in your best interests to review "HR 2847 - effective 1 July, 2014 as well when making real 'investments' and bank account deposits.

This RV may be a once in a lifetime event for us, yet to the IRS and our Country the taxes we'll pay will cut the debt in half or more with the two to three million US "exchangers" plus the "Dinars" already being held by the US Treasury could possibly wipe out the majority of the $17 Trillion Govt. official debt..  GO RV!.

Edited by Pablo404
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Somewhat of a correction:   Going thru IRS Pub. 550 page 39 "Foreign Currency" heading, there is a referral to IRS Code 988 and currency 'investments and definitions.

Basically IRS Code 988 in part sumarizes that "forex" type transactions can be considered investments but most cash investors select consideration and treatment as 'ordinary' other income to benefit from the ability to offset losses even of a total negative number and report either on line 21 of the 1040 tax form "Other Income" Since the 'Dinar' is not traded on "Forex" and we deal and plan to exchange actual currency, ours would be classified as Ordinary  "Other Income"  and taxed in your net 'tax table bracket' of your total net income.

ref: IRS Code 988 -1(a)7 and 988.3 and others for reading.   We all hope it is worth 'doing the numbers' to see if it is benificial to spread out 'exchanges' for ordinary income tax purposes in the coming years. Then again, tax laws change and sometimes 'retroactively'. Do your own due diligence and consult expert advice for your particular situation.

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As always " DO YOUR HOMEWORK<" Seek professional help.  :twocents:

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As always " DO YOUR HOMEWORK<" Seek professional help.  :twocents:

Last time I, "sought professional help", they locked me up. Go figure. LOL

4-15-2014

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As always " DO YOUR HOMEWORK<" Seek professional help.  :twocents:

I've sought "professional" Help before, they all tell me the is no hope for me! :lol: :lol: :lol:

I also have a few choice words for the IRS, but can't type them here.

Wm13

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It is not an investment, so capital gains do not apply. When you go to the bank, it is a simple currency exchange.

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Sportfisher is correct.

We may consider the "Dinar" we obtained as an "investment" but it does not meet the IRS definitions of an 'investment' and is simply a "currency exchange". Profits over the acquisition value (purchase costs) and the "exchange" value of more than $200 are reported as "other income" - Line 21 IRS tax form 1040 and you pay taxes based on your resulting final 'Tax Bracket'. (current max 39.6% -ouch!) One may need to consider also the propensity of Congress to make some tax laws effective "retroactive".

Tax planning becomes essential to minimize net taxes. Gift letters to children or relatives, donations to a specific charity or 501©3 entity, timing of 'exchange' or exchanges(s) are but a few considerations along with the new 7/1/2014 FATCA effects.

Note: If an "ex post facto"(retroactive/after the fact)tax is enacted by Congress, it would seem that a "class action" could be funded and pursued to SCOTUS as there have been comments by at least two SC Justices that they would like a "ripe" opportunity to review this action which currently is applied only to "criminal" laws not 'civil' laws, They have expressed their belief that it should apply to "all" laws. Do your diligent homework with counsel for taxes.

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I've sought "professional" Help before, they all tell me the is no hope for me! :lol: :lol: :lol:

I also have a few choice words for the IRS, but can't type them here.

Wm13

I've got a few choice words for the IRS . . . *^#% = *^&. **$. *. %^$#@ +  <&$%^%#$  F&^*   Y$#  ^#&HOLE . . . It's a start  W13 :twothumbs:

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Hmmmm?  I wonder if the 'dinarians' got together if there would be enough to "Bribe" the members of Congress to Terminate the IRS?  Probably not as they have access to the taxes already and are stealing us blind with permanent benefits and pensions.

  It was a brief thought.  Hmmm? I wonder how much "Luigi 'the squigee' " might charge to help us 'Clean the House'?

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