Wednesday, January 5, 2011

So what did happen to my Capital Gains Tax Cuts?

Investors who enjoyed a huge increase in their portfolio in 2010 will see some relief at income tax time.

Due to the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 that became law on December 17, 2010, several of the Bush era tax cuts were extended two more years including the Capital Gains Tax cuts.

For tax years 2010-2012 the rate on capital gains is 0% on capital gains if you find yourself in the 10% or 15% tax bracket. This will allow you sell assets for a profit tax-free. Your 2010 taxable income – gross income minus exemptions and deductions – can't exceed $34,000 for individuals or $68,000 for married couples filing jointly.

If your taxable income is above these amounts, your capital gains tax rate is 15%. The tax rate is figured after including the capital gains in your income. The tax rate on capital gains and the tax rate on other ordinary income is figured separately.

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