Capital Gains Taxes Explained

Capital gains taxes can be a confusing topic. Short-term gains and losses versus long-term gains and losses. What rate are they taxed at? Can you net gains against losses? Short-term capital gains/losses -  Investments held for one year or less.

Short-term capital gains get the worst tax treatment of the two. They are taxed at your ordinary income tax rate ranging from 10% to 39.6% depending on your total taxable income.

Long-term capital gains/losses - Investments held over one year.

Long-term capital gains get a more beneficial tax treatment. If your ordinary tax rate is at 15% or less, you may qualify for the 0% long-term capital gains rate. Most taxpayers are levied a 15% long-term capital gains rate. High income taxpayers, in the 39.6% bracket (income over $484,600 married filing jointly), pay the highest 20% long-term capital gains rate. An additional 3.8% surcharge is assessed on taxpayers with AGI over $250,000 (married filing jointly).

Learn more about the various tax rates for 2015 here.

So, how do all of these come together? Capital Gains Taxes Explained for 2015:

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