Capital Gains Tax Bracket for 2011, 2012

Capital Gains tax applies if you have a profit when you sell a capital asset, which would include property such as: Stocks, Bonds, Mutual Fund Shares and Real Estate. Your tax bracket for capital gains tax is based on whether your gain was short term or long term.

Short-Term Gain:

A short term gain is when your holding period was less than a year. For example If you bought stock on May 4, 2008 your holding period would begin on May 5^th. The end of your first year would be May 4, 2009. If you sold before or on that day it would be a short term gain.

For 2009 and 2010 short term gains are taxed at your maximum tax rate just like your salary, up to 35%.

Long-term Gain:

A long term gain would be when your holding period was more than a year. Using the example above for a short term gain, if you sold your Bond on May 5, 2009 this would be considered a long term gain.

For 2009 and 2010 long term gains are taxed at either 0% or 15%. The 0% tax is set to expire at the end of the year in 2010.

Also keep in mind that your capital gain is subject to state income tax as well as the federal capital gains tax. Depending on the state you live in your capital gains may be taxed as either a state capital gains, or as ordinary income.

There are online tax calculators that can determine your exact tax owed regarding your capital gain, whether it is a short-term or long-term gain.

Visit TurboTax Online today to report your capital gains. TurboTax offers guaranteed accuracy in calculating your return.