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Posted by My interest on April 1, 2008, 11:38 am
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I am getting a bit confused on this, and will appreciate your
comments.
I understand that the long-term capital gain is currently taxed at
15%. The question is this a cap rate or fixed rate. For example,
assuming one person total income is $10K and all are long-term capital
gain. What rate will this person be taxed at?
A related question is whether the tax residency status of person-in-
question matter? i.e. will the rate same for resident and non-resident
(after taking consideration of applicable deduction perspectively).
Thanks.
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Posted by removeps-groups@yahoo.com on April 1, 2008, 12:15 pm
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> I understand that the long-term capital gain is currently taxed at
> 15%. The question is this a cap rate or fixed rate. For example,
> assuming one person total income is $10K and all are long-term capital
> gain. What rate will this person be taxed at?
The long term capital gain rate is 5% or 15% for 2007, so the above
would be taxed at 5%. See for example
http://www.bankrate.com/brm/itax/tips/20010305a.asp.
You still get the standard deduction and exemption, but this income is
not qualified for the stimulus check.
In 2008, the lower 5% ratre drops to 0%.
> A related question is whether the tax residency status of person-in-
> question matter? i.e. will the rate same for resident and non-resident
> (after taking consideration of applicable deduction perspectively).
Generally 1040-NR filers would be taxed at a flat 30% on their
personal capital gains, no tax break here. However, I would need to
check if income from long term capital gains even need to be reported
(supposedly only if they are from US corporations do they need to be
reported, but what about US corporations cross listed on foreign
exchanges), and besides do foreign holders of US stock and mutual
funds that pay dividends and capital gains even bother filing 1040-
NR? I know US holders of foreign stocks that pay dividends don't file
in the foreign country. Also, there are many tax rates on page 4 of
the 1040-NR. So basically, I have no idea the answer to your question.
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by Rich Carreiro on April 1, 2008, 12:27 pm
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> I am getting a bit confused on this, and will appreciate your
> comments.
>
> I understand that the long-term capital gain is currently taxed at
> 15%. The question is this a cap rate or fixed rate. For example,
> assuming one person total income is $10K and all are long-term capital
> gain. What rate will this person be taxed at?
If a single person's total adjusted gross income is $10,000 of long-term
capital gain, then the first $8,750 isn't taxed at all (offset by
standard deduction and personal exemption), and the rest will be taxed
at 5%.
In general, you figure out what your taxable income is *not* counting
long-term gains. If that adjusted taxable income is below the end
of the 15% bracket, then long-term gains falling in to whatever
"room" is left in the bracket is taxed at 5% (0% in 2008), with any
other long-term gains being taxed at 15%.
Note -- those are only nominal rates. Depending on your total tax
situation, various phaseouts can boost the actual marginal rate
on gains above 15%.
--
Rich Carreiro rlc-news@rlcarr.com
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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