Lehman Brothers Financial SA (LEHNQ)

[wayne49]

I think this is a good explanation. Its still better to consult the IRS code as we are not tax gurus.


The stock market has been in overdrive for years, which means you could be making a bundle on your investments. But with the exception of savings in retirement accounts like 401(k)s and IRAs, the tax man will probably take a cut of your newfound wealth. It’s called capital gains, and how much tax you pay depends on how long you hold the investments, and how much you earn.

Long-term vs. short-term capital gains taxes
Long-term capital gains are those you earn on assets you’ve held for more than a year. Under the new 2018 tax law, such gains are taxed at three rates, depending on your overall income: zero, 15 percent and 20 percent. For example, a married couple filing jointly pays no capital gains tax if their total taxable income is $77,220 or less. They’ll pay 15 percent on capital gains if their income is $77,221 to $479,000. For couples above that income level, the rate is 20 percent. There also is a de facto fourth bracket for certain high earners who must pay an additional 3.8 percent on investment income as part of the Affordable Care Act.

By contrast, short-term capital gains are from assets you buy and sell within one year. They are taxed as regular income, which is always higher than the long-term capital gains rate. The government gives you a break on long-term gains to encourage buy-and-hold investments (as opposed to speculating), which stabilize the economy.

https://www.bankrate.com/investing/long-term-capital-gains-tax/