- Days left
Currently, capital gains tax rates are more favorable than regular income tax rates. That's why it's important for taxpayers who own stocks, bonds, mutual funds, or certain other investments to pay attention to the rules.

Favorable capital gains rates apply when the taxpayer has held the investment for more than a year, referred to as "long-term." If you hold an investment less than a full year, you don't get capital gains rates. So it's important when you're selling an investment to look at how long you've held it. You may want to hold it just a little longer if you're close to a full year of ownership.

What is the capital gains tax rate? If you're in a higher tax bracket, the capital gains rate is 15%. If you're in a lower tax bracket, the capital gains rate is only 5%. There are some exceptions to these rules, but these will apply to most taxpayers.

It pays to look carefully at your holding period for an investment. You could save yourself a significant amount of tax by ensuring that you've got a long-term holding period and are therefore able to get the benefit of capital gains tax rates on that investment. More information on Capital Gains can be found on the IRS website.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.

Increase your money and finance knowledge from home

Timing Your Spending

How to pay less by changing when you purchase.

View Course »

Understanding Credit Scores

Credit scores matter -- learn how to improve your score.

View Course »

TurboTax Articles

Are Losses on a Roth IRA Tax Deductible?

When the value of your investments in a Roth IRA (Roth Individual Retirement Account) decreases, you might wonder if there is a way to write off those losses on your federal income tax return. Find out what you can and can't write off when it comes to your Roth IRA.

Video: Save Taxes by Saving Energy

Note: The content of this video applies only to taxes prepared for 2010. It is included here for reference only. From basements to attics, the federal government wants homeowners to save energy year-round. They're even willing to pitch in with tax credits for energy-efficient improvements.

Video: Making Work Pay Tax Credit 2009

Note: The content of this video applies only to taxes prepared for 2009 and 2010. It is included here for reference only. Most Americans enjoyed an instant tax break last year thanks to the Making Work Pay Tax Credit. But some may face an unexpected tax bill in April.

Add a Comment

*0 / 3000 Character Maximum