3244 Brookside Rd 
Suite 140 
Stockton, CA 95219

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

The 12 Steps to Living Confidently: How to Set Up a Budget

The 12 Steps to Living Confidently: How to Set Up a Budget

Get ready. We’re about to get deep. Have you ever thought about what means, means? Yes, you can think about it for a moment…

Hindsight 2020: Should You Join The Great Resignation?

Hindsight 2020: Should You Join The Great Resignation?

Since the start of the Covid-19 pandemic, it’s been a rollercoaster ride for Americans.

Women on the Rise

Women on the Rise

Explore the growing influence women wield over the economy with this handy infographic.

 

Have A Question About This Topic?







Thank you! Oops!

7 Easy Ways to Improve Your Finances This Week

Improving your financial life doesn’t have to be tedious and time-consuming. These easy actions can lead to improvements in a

The Importance of Business Valuation

You know your company inside and out. But do you know how much it’s actually worth on the open market?

12 Days of Saving Tips

Having a set of savings tips to refer to can help make your short-term and long-term financial outlook merry and bright.

View all articles

What's My Potential Estate Tax?

This calculator helps estimate your federal estate tax liability.

Impact of Taxes and Inflation

Estimate the potential impact taxes and inflation can have on the purchasing power of an investment.

Bi-Weekly Payments

This calculator estimates the savings from paying a mortgage bi-weekly instead of monthly.

View all calculators

An Inside Look at Retirement Living

A number of questions and concerns need to be addressed to help you better prepare for retirement living.

Investment Strategies for Retirement

Investment tools and strategies that can enable you to pursue your retirement goals.

Managing Your Lifestyle

Using smart management to get more of what you want and free up assets to invest.

View all presentations

Safeguard Your Digital Estate

If you died, what would happen to your email archives, social profiles and online accounts?

The Richest Man in Babylon

In good times and bad, consistently saving a percentage of your income is a sound financial practice.

The Latte Lie and Other Myths

Check out this video to begin separating fact from fiction.

View all videos