How Much is Capital Gains Tax in 2011, 2012

When you sell a capital asset and receive a profit from it, you may be liable for a capital gains tax. You will have to file form 1040 (Schedule D) to report your capital gains and losses.

Some examples of capital assets would be:

• Stocks

• Bonds

• Mutual Fund Shares

• Real Estate

What is the difference between short-term and long-term capital gains?

A short-term capital gain is when you receive gains from either a property or investment that you owned for less than a year. A short-term capital gain is taxed much higher than a long-term gain. Short-term capital gains are taxed at your maximum tax rate, which could be up to 35%.

A long-term capital gain is taxed at 15% unless you are considered low income. Currently if you are in the 10-15% tax bracket as a taxpayer then you do not have to pay anything on your long-term capital gains. This 0% tax rate is only temporary to help stimulate the economy so take advantage of it now.

Capital Losses

If by chance you sold property or stock and lost money then you can apply that loss against other capital gains. If you had a short-term loss then that would be applied to any short-term gains. The same would apply for long-term capital losses.

If you have had a capital gain or loss this year and you are concerned about how to file this on your return then we suggest using an online tax preparation service. TurboTax Premier does all of the work for you which will save you a lot of time and ensure that your taxes are calculated correctly.