Shorting stock gains considered capital gains or income in the United States?
- Thread starter tonyzhou
- Start date
Look in a Yellow pages (or look online) for a U.S.-based accountant, call them, and ask?
Long or short doesn’t matter; it’s income. Key is the hold time:
- Hold for less than a year and it’s added to your income and taxed at the rate specified in your tax bracket.
- If you hold for a year or more it is taxed at 20%.
So you save a buck by investing for the longer term, which is what they’re trying to incentivize you to do.
Imnsho, if I can take a 3% profit in a day, taxes be damned I’m taking it.
- Hold for less than a year and it’s added to your income and taxed at the rate specified in your tax bracket.
- If you hold for a year or more it is taxed at 20%.
So you save a buck by investing for the longer term, which is what they’re trying to incentivize you to do.
Imnsho, if I can take a 3% profit in a day, taxes be damned I’m taking it.
It doesn't matter if you are long or short you are doing the same thing when you are profitable. Buying low and selling high.
This is incorrect on several points. First, short selling results in capital gains, not income. Yes, short term gains are often the same as income, tax wise, but not always (you could offset more STCGs with prior year capital losses, for example).
Second, the timing rules are such that short sales, even ones that last past the 1 year time period for long sales to qualify for the better long term capital gain rates, do not apply to shorts. There are some edge cases, but basically expect a short sale to be a short term capital gain or loss regardless of holding period.
https://www.forbes.com/sites/greats...ng-rules-can-be-a-taxing-matter/#46a57c1b8c00
http://www.marcumllp.com/insights-news/tax-consequences-of-short-selling-stock
If you want better tax treatment on a longer term short, consider being long an inverse ETF, short an index future, or buying a put with a year or more til maturity.
You need to get up to speed on the changes in this area.
https://www.marketwatch.com/story/your-simple-guide-to-the-new-capital-gains-tax-rates-2018-04-16
The Tax Cuts and Jobs Act (TCJA) included many changes that will affect individual taxpayers for 2018-2025. However it maintains the status quo for taxes on long-term capital gains (LTCGs) and qualified dividends. But the way it did so was confusing. Here’s what you need to know to dispel any confusion.
Rates and brackets for LTCGs and dividends before the TCJA
Before the TCJA, you faced three federal income tax rates on LTCGs and qualified dividends: 0%, 15%, and 20%. Those rate brackets were tied to the ordinary income rate brackets.
• If the LTCGs and/or dividends fell within the 10% or 15% ordinary income brackets, your tax rate was an unbeatably low 0%.
• If they fell within the 25%, 28%, 33%, or 35% ordinary income brackets, your tax rate was 15%.
• If they fell within the maximum 39.6% ordinary income bracket, you paid the maximum 20% rate.
Of course higher-income folks were also exposed to the dreaded 3.8% net investment income tax (NIIT). So many actually paid 18.8% (15% + 3.8% for the NIIT) or 23.8% (20% + 3.8%) on LTCGs and dividends instead of the advertised 15% or 20%.
Rates and brackets for LTCGs and dividends after the TCJA
The TCJA retains the 0%, 15%, and 20% rates on LTCGs and qualified dividends. However for 2018-2025, these rates have their own brackets that are no longer not tied to the ordinary income brackets. Here are the brackets for LTCGs and dividends.
2018 brackets
Single Joint Head of household
0% tax bracket $0-38,600 $0-$77,200 $0-$51,700
beginning of 15% tax bracket $38,601 $77,201 $51,701
beginning of 20% tax bracket $425,801 $479,001 $452,401
2019 brackets
Single Joint Head of household
0% tax bracket $0-39,375 $0-$78,750 $0-$52,750
beginning of 15% tax bracket $39,376 $77,751 $52,751
beginning of 20% tax bracket $434,551 $488,851 $461,701
After 2019, these brackets will be indexed for inflation.
Higher-income folks are still exposed to the 3.8% NIIT. So if you are in that category, you could still owe 18.8% (15% + 3.8% for the NIIT) or 23.8% (20% + 3.8%) to the Feds instead of the advertised 15% or 20%.
This story was updated on Feb. 22, 2019.
You're Welcome!!!!!!!
https://www.marketwatch.com/story/your-simple-guide-to-the-new-capital-gains-tax-rates-2018-04-16
The Tax Cuts and Jobs Act (TCJA) included many changes that will affect individual taxpayers for 2018-2025. However it maintains the status quo for taxes on long-term capital gains (LTCGs) and qualified dividends. But the way it did so was confusing. Here’s what you need to know to dispel any confusion.
Rates and brackets for LTCGs and dividends before the TCJA
Before the TCJA, you faced three federal income tax rates on LTCGs and qualified dividends: 0%, 15%, and 20%. Those rate brackets were tied to the ordinary income rate brackets.
• If the LTCGs and/or dividends fell within the 10% or 15% ordinary income brackets, your tax rate was an unbeatably low 0%.
• If they fell within the 25%, 28%, 33%, or 35% ordinary income brackets, your tax rate was 15%.
• If they fell within the maximum 39.6% ordinary income bracket, you paid the maximum 20% rate.
Of course higher-income folks were also exposed to the dreaded 3.8% net investment income tax (NIIT). So many actually paid 18.8% (15% + 3.8% for the NIIT) or 23.8% (20% + 3.8%) on LTCGs and dividends instead of the advertised 15% or 20%.
Rates and brackets for LTCGs and dividends after the TCJA
The TCJA retains the 0%, 15%, and 20% rates on LTCGs and qualified dividends. However for 2018-2025, these rates have their own brackets that are no longer not tied to the ordinary income brackets. Here are the brackets for LTCGs and dividends.
2018 brackets
Single Joint Head of household
0% tax bracket $0-38,600 $0-$77,200 $0-$51,700
beginning of 15% tax bracket $38,601 $77,201 $51,701
beginning of 20% tax bracket $425,801 $479,001 $452,401
2019 brackets
Single Joint Head of household
0% tax bracket $0-39,375 $0-$78,750 $0-$52,750
beginning of 15% tax bracket $39,376 $77,751 $52,751
beginning of 20% tax bracket $434,551 $488,851 $461,701
After 2019, these brackets will be indexed for inflation.
Higher-income folks are still exposed to the 3.8% NIIT. So if you are in that category, you could still owe 18.8% (15% + 3.8% for the NIIT) or 23.8% (20% + 3.8%) to the Feds instead of the advertised 15% or 20%.
This story was updated on Feb. 22, 2019.
You're Welcome!!!!!!!
Wow thank you for the corrections!
