I know this question is asked a lot, but the answer is never clear enough for me to tell!Assume that I have an adjusted income (from our salaries) of 70k- I know that I am in the 15% ordinary tax bracket for married filing jointly.If I sell stock and have a long-term capital gain of $50k, what happens?Will that push my ordinary tax bracket over 15%? (i.e. will that bump me into a higher tax bracket?) or to put it another way, since the 15% tax bracket is up to 73k, does that mean I can only have gains of $3k before I will be pushed into a higher tax bracket and have to pay 15% capital gains?Or will my ordinary tax bracket stay the same regardless of how much stock I sell? (that doesn't seem likely, though!)thanks! looking for an accountant now to explain things better, too.This is for the US.
For the most clear answer look at the tax form. You can see what income is added together before taxes are calculated.
If you want the absolute answer, get IRS publication 505, find the capital gains tax worksheet and fill it out. The short answer is when you switch brackets, the income that spilled over to the next brackets uses that tax rate. The 15% tax bracket for MFJ ends at taxable income of $73,800. If your taxable income (not the AGI) is already $70,000, you only have $3,800 left in that tax bracket. $50,000 - $3800 $46200 being taxed at the higher rate. If you really meant AGI of $70K and it's just the two of you, you'd have another $20K in the 15% bracket due to the standard deduction and personal exemptions.
see form 1040 instrcuions for line 13.
if you look at a 1040, you will see the items of INCOME which are entered and added together to find a Gross Income amount then if you are able to use any credits to reduce that, the result is your Adjusted Gross Income and yes, the stocks sales that you report(which could be profit or loss--up to $3K) are included in the Gross as well as the AGI
If you follow the law by reporting it properly, then only the gain counts towards your AGI. If you don't report the sale, then you are breaking the law, and all of the money you get for the stock (not just the gain) counts towards you AGI. In either case, the gain counts. The difference is whether it's only the gain or it's everything. And there may be a penalty for not reporting it.
