Santonocito and Associates

(425) 830-6612

Investment Read Time: 3 min

A Taxing Story: Capital Gains and Losses

Chris Rock once remarked, "You don't pay taxes – they take taxes." That applies not only to income but also to capital gains.

Capital gains result when an individual sells an investment for an amount greater than their purchase price. Capital gains are categorized as short-term gains (a gain realized on an asset held one year or less) or as long-term gains (a gain realized on an asset held longer than one year).

Keep in mind that the information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation.

Long-Term vs. Short-Term Gains

Short-term capital gains are taxed at ordinary income tax rates. Long-term capital gains are taxed according to different ranges (shown below).1


Long Term Capital Gains Tax Brackets (for 2022)

Tax Bracket/RateSingleMarried Filing JointlyHead of Household
0% $0 - $41,675$0 - $83,350$0 - $55,800
 15%$41,676 - $459,750$83,351 - $517,200$55,801 - $488,500
20%$459,750+$517,200+$488,500+

It should also be noted that taxpayers whose adjusted gross income is in excess of $200,000 (single filers or heads of household) or $250,000 (joint filers) may be subject to an additional 3.8% tax as a net investment income tax.1

Also, keep in mind that the long-term capital gains rate for collectibles and precious metals remains at a maximum 28%.2

Rules for Capital Losses

Capital losses may be used to offset capital gains. If the losses exceed the gains, up to $3,000 of those losses may be used to offset the taxes on other kinds of income. Should you have more than $3,000 in such capital losses, you may be able to carry the losses forward. You can continue to carry forward these losses until such time that future realized gains exhaust them. Under current law, the ability to carry these losses forward is lost only on death.3

Finally, for some assets, the calculation of a capital gain or loss may not be as simple and straightforward as it sounds. As with any matter dealing with taxes, individuals are encouraged to seek the counsel of a tax professional before making any tax-related decisions.

1. Investopedia.com, July 19, 2022
2. Investopedia.com, May 4, 2022
3. Investopedia.com, March 22, 2022

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

Share |
 

Related Content

How to Get Your Finances Ready for Retirement

How to Get Your Finances Ready for Retirement

Everyone has a vision of their retirement in their heads.

Millennials and Savings

Millennials and Savings

How much could you save now and in the long-term?

5 Original Ways to Show Your Love

5 Original Ways to Show Your Love

One of the best ways to love the people you care about is through properly protecting yourself, and them.

 

Have A Question About This Topic?







Thank you! Oops!

Don’t Get Trapped by These Retirement Myths

Have you been making correct assumptions about financial planning for retirement? Here are some popular retirement myths.

Ask a Financial Professional: Prepping For Parenthood

No couple is a 100% ready for a baby. So how expectant parents can get primed for the biggest change of their lives?

Diversification, Patience, and Consistency

Three important factors when it comes to your financial life.

View all articles

Comparing Mortgage Terms

Estimate the total cost in today's dollars of various mortgage alternatives.

Disability Income

This calculator estimates your chances of becoming disabled and your potential need for disability insurance.

Lifetime of Earnings

Estimate how much you have the potential to earn during your working years.

View all calculators

5 Smart Investing Principles

Principles that can help create a portfolio designed to pursue investment goals.

5 Smart Investing Strategies

There are some smart strategies that may help you pursue your investment objectives

Your Cash Flow Statement

A presentation about managing money: using it, saving it, and even getting credit.

View all presentations

The Real Cost of a Vacation Home

What if instead of buying that vacation home, you invested the money?

A New Way to Look at Your Bucket List

Bucket lists don’t have to be for tomorrow.

Choosing a Mortgage

Selecting a mortgage isn't an easy process. Get a better understanding of how professionals make the right decisions.

View all videos