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Personal Finance (Not Investing) • Making sure I understand how capital gains are taxed

I find the language on the couple web sites I looked at confusing when they describe how capital gains are taxed, , and since I never sell (still in the accumulation phase) I have no practical experience with CG taxes. I was under the impression that your total income (W2+LTCG) determine your tax brackets, but as I try to work through the math I think I'm wrong even though many sites say your CG is X% if your "income" is greater than Y.

For example assume that: (an example I made up, not actual data)
- I am single, I use the default deduction
- I have a job that pays $100K a year taxable (ignore SS, medicare, 401(k), play along and assume that I have $100K taxable income)
- I also sold $100K of stocks with a basis of 40% for LTCG of $60K (all long-term to make it easy)

using 2024 tax brackets, is this correct (within rounding errors)

(edited the math below after the original post to show it goes up to 22%)
Without CG, my job bring is $100K, but after the $13,850 deduction my taxable income is $86.2K. That puts me in the 22% bracket and I pay 10% of the first $11KK and 12% of the difference between 11K and $47K, and 22% of the portion above $11K. That's my "W2 income" tax (about $1400 if I did the math right)

Now with CG, do I literally do a second calculation of $60K LTG, with a 0% cutoff of $44,625, so the first $44,625 in LTG are not taxed, and the remaining $60K-$44,625 are taxed at 15%, or about $2300 in taxes?

Meaning my total fed taxes would be about $14000+$2300?


Bonus question: I live in Colorado and it seems that CO is using an "income is income" stance and 4.4% flat tax, so for CO I made $100K - standard deduction = $86.2K plus all LTCG also counted as income so a total income of $146.2 taxed at 4.4% or another $6,4K (CO taxes LTCG from the first dollar?)

Statistics: Posted by Raspberry-503 — Mon Apr 01, 2024 12:07 pm — Replies 10 — Views 251



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