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Is the gain from a foreign currency futures contract, an options contract, or a forex contract? Is the gain due to it's maturity or closing a position?
According to Publication 525, if the gain on the currency is more than $200 and you have held it for more than 1 year then it would be taxed at long term capital gains rates. These rates will either be 0% or 15% (or a blended rate) depending on your marginal income tax bracket. If it was held for less than 1 year then it would be taxed as a short term capital gain.
See page 33 - http://www.irs.gov/pub/irs-pdf/p525.pdf
My husband and I only have social security income. Did I understand you that the long range is 0/15%. What is short term rate.
I thought more than one year is short term.
Less than one year is long term.
How much will I pay for the long term?
The 0 - 35% tax rates are based on different marginal tax brackets which are determined by a taxpayer's total income, filing status, and deductions. If the gain is short term (held 1 year or less) and is over a $1 million then the bulk of it will be taxed at 35% because your total income exceeds $372,950 which is the taxable income level when the 35% bracket begins. Here is a link to the 2009 tax brackets - http://taxes.about.com/od/2009taxes/qt/2009_tax_rates.htm
If the gain is long term (held for more than 1 year), then it will be taxed at a maximum of 15%.
Income from earnings, taxable investments, and gains are taxable to all taxpayers regardless of their ages. Some extra deductions are available at age 65 to reduce or eliminate taxes but these additional reductions are relatively small.