If you have sold any stocks, bonds, or real estate then these would be considered your capital gains. You are not required to pay capital gains on these assets from year to year, only when they are sold. The capital gain amount will be determined by comparing the original purchase price to the sale price.

You will then be taxed on that profit by the federal government. This amount is taxed at a much lower rate than income is. The capital gains tax tends to help out the wealthy more than it does the middle class as it offers a break to high income individuals.

How Much?

You will typically be taxed the 5% capital gains tax if your income is between the 10%-15% income bracket. You will be charged the 10% capital gains tax if your income is on the 25% income bracket or above. You will be charged the 25% capital gains tax on any real estate that was sold and had depreciated. The 28% capital gains tax will be applied to the sale of collectibles and small business stock.

New in 2008

There is a tax break for 2008. Any taxpayers that sold long term capital assets that fall within the 10%-15% income bracket will be exempt from the tax. This means that a married couple must have income below $65,100.00 and a single filer must have income below $32,550.00. This tax break will expire in 2010 so if you are thinking about selling long term assets, now is the time.

If you have any capital gains tax questions, be sure to visit TurboTax Online for free tips on capital gains exemptions.