% capital gains tax rates if income below a certain amount

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2Scaramouche
2Scaramouche Member Posts: 1 Newcomer
edited October 2023 in General

Does anyone know how FreeTaxUSA takes into account the above. This is how the IRS website describes the issue:

"The tax rate on most net capital gain is no higher than 15% for most individuals. Some or all net capital gain may be taxed at 0% if your taxable income is less than or equal to $41,675 for single and married filing separately, $83,350 for married filing jointly or qualifying surviving spouse or $55,800 for head of household."

THANKS!

Answers

  • MatthewD
    MatthewD FreeTaxUSA Team Posts: 247
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    Hi 2S,

    That is a great question. The FreeTaxUSA software automatically utilizes the Schedule D Tax Worksheet (see page D-16) for Long Term Capital Gains and Qualified Dividends. Our software will accurately calculate the lowest tax for your situation, making it as simple as entering your capital gains and dividends.

    Thanks for the question and hope this helps others!

  • shailesh1783
    shailesh1783 Member Posts: 1 Newcomer
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    what are other taxable income brackets for capital gains tax rates of 20% an 15%.

  • MatthewD
    MatthewD FreeTaxUSA Team Posts: 247
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    Hi Shailesh,

    This IRS Tax Topic 409 goes into this issue in detail.

    Basically, the tax rate of long term capital gains rarely goes above 15% for most people. For many people it will be 0%. It all depends on your marginal tax rate at the income level you are at.

    The IRS states, "The tax rate on most net capital gain is no higher than 15% for most individuals. Some or all net capital gain may be taxed at 0% if your taxable income is less than or equal to $41,675 for single and married filing separately, $83,350 for married filing jointly or qualifying surviving spouse or $55,800 for head of household." This is for 2022.

  • lallen
    lallen Member Posts: 2 Newcomer
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    Will the proceeds received for the sale of the property be included in my taxable income calculation before I put in my business income? I am a sole proprietor and have no other taxable income. I will be well below the $40K taxable income threshold.

  • KeriC
    KeriC FreeTaxUSA Agent Posts: 93
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    Yes, the proceeds from the sale of property will be included in your taxable income and will play a part in determining if you fall into the 0% capital gains tax rate. Remember that proceeds - your basis = the taxable portion of your property sale.