Hi and welcome to our site!I assume $35,000 in wages and $8.000 in mortgage interest deduction.Assuming head of household filing status with ONE dependent child.With additional $650,000 in long-term capital gains - following are estimations-- Adjusted Gross income (AGI) $685000
-- Greater of itemized or std. deduction - $8950-- Taxable Income - $676050Your estimated tax liability is $145177including regular tax $97387 and alternative minimum tax (AMT) - $29360 and Net Investment Tax $18430.
Im not quite sure I understand
Most likely - you will be able to itemize - and your deduction will be more than $8950 - but we do not have enough information for that estimation.Specifically - you may deduct TX sales tax - your in come level $1820.
Please be sure to ask for clarification.
let me be clearer. i am selling a c corp that i am 100% shareholder of. $650,000 is being paid directly to me and not the c corp as it is considered the sale of personal goodwill. i am not necessarily selling a physical asset
If you are selling shared of C-corporation - you will realize a capital gain.The gain will be calculated as (selling price) MINUS (basis)If you owned shares more than a year - the gain will be treated as long term capital gain.You are selling shares of the corporation.
i was under the assumption that long term capital gains tax would apply to the $650,000 which means that the minimum and maximum of this amount ranges from 0 - 20%. additionally, what about the 3.8 percent of medicare tax?
Your assumptions are correct. However because your total income is above $250k - the long term capital gain is taxed at 20% rate plus 3.8% additional tax plus AMT.
but isn't it put into brackets? for example, the first $48k is 0%, from 48-425 is 15%, and then the final $225 is at 20%?
Your estimated tax liability is $145177 including -- regular tax $97387 -- alternative minimum tax (AMT) - $29360 -- Net Investment Tax $18430 - so-called "Medicare tax"
but isn't it put into brackets? for example, the first $48k is 0%, from 48-425 is 15%, and then the final $225 is at 20%?Yes - the long term capital gain is taxed at your actual tax rates - but not more than 20%
so wouldnt my tax liability be the following at worst case:
first $48,600 - $0 Tax due
Amounts between $48,601 - $425,000: $56,400
Amounts between $425,001 - $650: $45,000
Medicare 3.8% only applies over $225,000 - so therefore that liability would be only: $16,250
my assumed total liability (without taking deductions into account) would be $0 + 45,000 + $56,400 + 16,250 == $117,650
Your estimated Taxable Income - $676050 (after deductions as above)Tax rates will be - see page 3 - http://www.irs.gov/pub/irs-drop/rp-13-15.pdfTABLE 2 - Section 1(b) – Heads of Households-- first $48,600 will be taxed $6,652.50-- the rest will be taxed at 20% as long term capital gain ($676050 - $48,600) * 20% = $125,490Total $132142That would be regular income tax liability.
You will add 3.8% Net Investment Tax on $650,000 of capital gains = $24700and the rest will be AMT - total will be about $145,000.