Author Topic: Capital gains, understanding 15% threshold  (Read 1984 times)

slugsworth

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Capital gains, understanding 15% threshold
« on: June 03, 2015, 07:14:06 PM »
Please feel free to direct me to a post I couldn't find but I'm trying to understand the 15% income tax threshold for avoiding capital gains taxes.

So for 2015 the threshold for individual tax payers is $37,450 so assuming that a tax payer was maxing out their 401k ($18000), trad ira ($5500), HSA ($3350) and took the standard deduction ($6300) they could have an income of up to $70,600 before triggering capital gains. I'm assuming that income would include both the capital gains and any payroll earnings, correct?

Much thanks for any help on this one! I've read some of the mad fientist posts in an effort to fully grasp the tax law but am not quite there!




MDM

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Re: Capital gains, understanding 15% threshold
« Reply #1 on: June 03, 2015, 09:14:37 PM »
You have it pretty much correct.  There is also a $4,000 personal exemption you subtract from earnings to get down to taxable income.

See http://www.bankrate.com/calculators/tax-planning/1040-form-tax-calculator.aspx or
https://turbotax.intuit.com/tax-tools/calculators/taxcaster/ or
the reader case study spreadsheet for some "what if?" tools.

Also see http://www.aicpa.org/publications/taxadviser/2014/october/pages/tax_clinic_04.aspx and the flowchart linked there.

slugsworth

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Re: Capital gains, understanding 15% threshold
« Reply #2 on: June 12, 2015, 11:02:28 AM »
MDM, I just wanted to say thanks for the response and the links!

MDM

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Re: Capital gains, understanding 15% threshold
« Reply #3 on: June 12, 2015, 11:42:30 AM »
You're welcome.  Good to hear that they are useful to you!