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Thursday Afternoon Opinions @ 5:46 PM CDT - 9/23/2021


ronscarpa
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Got an email from my Roth IRA firm warning of changes that Biden's tax proposal will have if passed.  It includes a cap of $10 million and restrictions on entities within the Roth.  I am of age and have had the Roth long enough to be able to take out any excess over the cap tax free.  BUT, this does show the government can invade your investments.

 

I am a firm believer in diversification.  I have IQD in house, some in the Roth, and some gifted to an IBC (Name Reserve).

 

I think at the very least people need to be watchful of the changing tax laws and seeking ways to counter them.

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On 9/24/2021 at 9:11 AM, Half Crazy Runner said:

You are correct 👍🏻 According to my tax attorney husband who has been doing taxes since 1978

Half Crazy Runner,

 

What is the short term capital gains tax and what is the long term capital gains tax?  The percentage is what I am looking for.  I am thinking about doing some trading instead of holding everything.  What's the difference in the tax rate if I hold a stock for more than a year versus if I sell within a year of buying?

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14 hours ago, shixjr said:

Half Crazy Runner,

 

What is the short term capital gains tax and what is the long term capital gains tax?  The percentage is what I am looking for.  I am thinking about doing some trading instead of holding everything.  What's the difference in the tax rate if I hold a stock for more than a year versus if I sell within a year of buying?

Ok, here’s the long answer (straight from the IRS) - 

 

Capital gains tax: Short-term vs. long-term

Capital gains taxes are divided into two big groups, short-term and long-term, depending on how long you’ve held the asset.

Here are the differences:

  • Short-term capital gains tax is a tax applied to profits from selling an asset you’ve held for less than a year. Short-term capital gains taxes  are paid at the same rate as you’d pay on your ordinary income, such as wages from a job.
  • Long-term capital gains tax is a tax applied to assets held for more than a year. The long-term capital gains tax rates are 0 percent, 15 percent and 20 percent, depending on your income. These rates are typically much lower than the ordinary income tax rate.

Sales of real estate and other types of assets have their own specific form of capital gains, and are governed by their own set of rules (discussed below).

What are the capital gains tax rates?

While the capital gains tax rates remained the same as before under the Tax Cuts and Jobs Act of 2017, the income required to qualify for each bracket goes up each year to account for workers’ increasing incomes. Here are the details on capital gains rates for the 2020 and 2021 tax years.

Long-term capital gains tax rates for the 2020 tax year

Filing Status 0% rate 15% rate 20% rate
Single Up to $40,000 $40,001 – $441,450 Over $441,450
Married filing jointly Up to $80,000 $80,001 – $496,600 Over $496,600
Married filing separately Up to $40,000 $40,001 – $248,300 Over $248,300
Head of household Up to $53,600 $53,601 – $469,050 Over $469,050

Source: Internal Revenue Service 

Long-term capital gains tax rates for the 2021 tax year

Filing Status 0% rate 15% rate 20% rate
Single Up to $40,400 $40,401 – $445,850 Over $445,850
Married filing jointly Up to $80,800 $80,801 – $501,600 Over $501,600
Married filing separately Up to $40,400 $40,401 – $250,800 Over $250,800
Head of household Up to $54,100 $54,101 – $473,750 Over $473,750

Source: Internal Revenue Service 

For example, in 2020, individual filers won’t pay any capital gains tax if their total taxable income is $40,000 or below. However, they’ll pay 15 percent on capital gains if their income is $40,001 to $441,450. Above that income level, the rate jumps to 20 percent.

In 2021, individual filers won’t pay any capital gains tax if their total taxable income is $40,400 or less. The rate jumps to 15 percent on capital gains, if their income is $40,401 to $445,850. Above that income level the rate climbs to 20 percent.

In addition, those capital gains may be subject to the net investment income tax (NIIT), an additional levy of 3.8 percent if the taxpayer’s income is above certain amounts. The income thresholds depend on the filer’s status (individual, married filing jointly, etc.).

Meanwhile, for short-term capital gains, the tax brackets for ordinary income taxes apply. The 2020 tax brackets are 10 percent, 12 percent, 22 percent, 24 percent, 32 percent, 35 percent, and 37 percent.

Unlike the long-term capital gains tax rate, there is no 0 percent rate or 20 percent ceiling for short-term capital gains taxes.

While capital gains taxes can be annoying, some of the best investments, such as stocks, allow you to skip the taxes on your gains as long as you don’t realize those gains by selling the position. So you could literally hold your investments for decades and owe no taxes on those gains.

 

hope this is helpful!

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I have a question for tax people...............

 

Hypothetically, if it RV's at $0.25 and we have a month or two of a window to cash in and I have 3 million Dinar, (HERE COMES MY QUESTION) if I exchange the 3 million Dinar for the new smaller denomination of Dinars to wait for a possible float, would there be a tax on that $750,000 worth of the new smaller denominations since I only changed the denominations of the Dinar and not really cashed in  (or out) ?????????? I know that it is currency and not stock, but if I had a  penny stock that I purchased at $0.10 and another company bought that company and  increased that stock value to $3.00 and they issued me a new stock certificate with the new company, that is just a transfer. Isn't that the same princple ?

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14 hours ago, Half Crazy Runner said:

Ok, here’s the long answer (straight from the IRS) - 

 

Capital gains tax: Short-term vs. long-term

Capital gains taxes are divided into two big groups, short-term and long-term, depending on how long you’ve held the asset.

Here are the differences:

  • Short-term capital gains tax is a tax applied to profits from selling an asset you’ve held for less than a year. Short-term capital gains taxes  are paid at the same rate as you’d pay on your ordinary income, such as wages from a job.
  • Long-term capital gains tax is a tax applied to assets held for more than a year. The long-term capital gains tax rates are 0 percent, 15 percent and 20 percent, depending on your income. These rates are typically much lower than the ordinary income tax rate.

Sales of real estate and other types of assets have their own specific form of capital gains, and are governed by their own set of rules (discussed below).

What are the capital gains tax rates?

While the capital gains tax rates remained the same as before under the Tax Cuts and Jobs Act of 2017, the income required to qualify for each bracket goes up each year to account for workers’ increasing incomes. Here are the details on capital gains rates for the 2020 and 2021 tax years.

Long-term capital gains tax rates for the 2020 tax year

Filing Status 0% rate 15% rate 20% rate
Single Up to $40,000 $40,001 – $441,450 Over $441,450
Married filing jointly Up to $80,000 $80,001 – $496,600 Over $496,600
Married filing separately Up to $40,000 $40,001 – $248,300 Over $248,300
Head of household Up to $53,600 $53,601 – $469,050 Over $469,050

Source: Internal Revenue Service 

Long-term capital gains tax rates for the 2021 tax year

Filing Status 0% rate 15% rate 20% rate
Single Up to $40,400 $40,401 – $445,850 Over $445,850
Married filing jointly Up to $80,800 $80,801 – $501,600 Over $501,600
Married filing separately Up to $40,400 $40,401 – $250,800 Over $250,800
Head of household Up to $54,100 $54,101 – $473,750 Over $473,750

Source: Internal Revenue Service 

For example, in 2020, individual filers won’t pay any capital gains tax if their total taxable income is $40,000 or below. However, they’ll pay 15 percent on capital gains if their income is $40,001 to $441,450. Above that income level, the rate jumps to 20 percent.

In 2021, individual filers won’t pay any capital gains tax if their total taxable income is $40,400 or less. The rate jumps to 15 percent on capital gains, if their income is $40,401 to $445,850. Above that income level the rate climbs to 20 percent.

In addition, those capital gains may be subject to the net investment income tax (NIIT), an additional levy of 3.8 percent if the taxpayer’s income is above certain amounts. The income thresholds depend on the filer’s status (individual, married filing jointly, etc.).

Meanwhile, for short-term capital gains, the tax brackets for ordinary income taxes apply. The 2020 tax brackets are 10 percent, 12 percent, 22 percent, 24 percent, 32 percent, 35 percent, and 37 percent.

Unlike the long-term capital gains tax rate, there is no 0 percent rate or 20 percent ceiling for short-term capital gains taxes.

While capital gains taxes can be annoying, some of the best investments, such as stocks, allow you to skip the taxes on your gains as long as you don’t realize those gains by selling the position. So you could literally hold your investments for decades and owe no taxes on those gains.

 

hope this is helpful!

Half Crazy Runner, do these brackets apply to profit we would receive from currency investments as well as stock investments?

 

Should I stop working before I make 80k this year so I can be in the 0% bracket for long term? Cause 0% of 7 million IQD sounds pretty good. 😉

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22 minutes ago, Fairways&Greens said:

BTW, I talked with an accountant today and she told me a currency exchange is NOT a taxable event. Just sayin’

 

I strongly suggest you get a second opinion because if they are wrong you could find yourself tangled up in red tape ( or worse ) for a long time.

 

   Just saying,     pp

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12 minutes ago, rvmydinar said:

Wow. That sounds too good to be true. Can someone else verify that?

Yes.  I can verify that that sounds too good to be true!!😄

 

Sorry rvmydinar, I couldn't resist.

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8 hours ago, Fairways&Greens said:

BTW, I talked with an accountant today and she told me a currency exchange is NOT a taxable event. Just sayin’

CPA?  I suggest you go to your state's accounting board website and look them up.  You would be surprised how many out there have been brought before the board.

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9 hours ago, Fairways&Greens said:

BTW, I talked with an accountant today and she told me a currency exchange is NOT a taxable event. Just sayin’

Technically that’s correct. If you go to your bank and buy euros for your trip to France and come back and exchange what you have left for dollars, you don’t pay any taxes on that. If you buy dinars specifically for an investment and cash in, you are supposed to claim the profits as capital gains and pay the taxes. However, you can try to claim your dinars as a simple currency exchange and not owe any tax. It might be worth a try. I imagine it will all come down to how intense the IRS is going to be scrutinizing dinar exchanges. 

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18 minutes ago, Half Crazy Runner said:

Technically that’s correct. If you go to your bank and buy euros for your trip to France and come back and exchange what you have left for dollars, you don’t pay any taxes on that. If you buy dinars specifically for an investment and cash in, you are supposed to claim the profits as capital gains and pay the taxes. However, you can try to claim your dinars as a simple currency exchange and not owe any tax. It might be worth a try. I imagine it will all come down to how intense the IRS is going to be scrutinizing dinar exchanges. 

The IRS intense????

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