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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10131
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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How much money to I pay gains stocks, If I am on

Customer Question

How much money to I pay for capital gains stocks, If I am on disability?
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.
Hi,
You MAY not have a taxable gain at all.
Gain = sales price MINUS your basis (investment IN the stock).
Then Capital gains (if you held the stocks for a year or more so that they're long term) are taxed at ..
*0% if taxable income falls in the 10% or 15% marginal tax brackets
*15% if taxable income falls in the 25%, 28%, 33%, or 35% marginal tax brackets
*20% if taxable income falls in the 39.6% marginal tax bracket
So, if you can tell me a little more about how MUCH gain you had and what your other income is (how much and whether it's Social Security Disability or not)
I can give you a more specific answer.
Let me know ...
I'll be here.
lane
Customer: replied 1 year ago.
I get $1,500 a month on disability..Are you saying that if I hold the stocks for over a year, I pay zero dollars in capital gains..Example.. I have 4,000 shares of a stock that I bought for $19 a share. Let's say it sold it for $50 a share.I would pay zero dollars in capital gains, if it was long term? Second with the same example how much would I pay in capital gains, if it was short term, how much would I pay in capital gains?
Expert:  Lane replied 1 year ago.
No the capital gain IS taxable income so that (4000 x 50) - (4000 x 19) = 124000 gain IS a part of your taxable income putting PART of that money into the 25% bracket... therefor taxed at 15% capital gain rate.
FIrst only (124000 - 10300), 113700, is taxable because of the standard deduction and the personal exemption.
And then you don't hit the 25% ORDINARY income tax bracket (which means that SOME of the money WILL be taxable at 15% gains rate) until your taxable income gets to 37450.
See this:
http://taxes.about.com/od/Federal-Income-Taxes/fl/Federal-Income-Tax-Rates-for-the-Year-2015.htm
And 113700 - 37450 = 76250, so 76250 OF that gain is taxed at 15%
76250 x .15 = 11437.5
So your effective tax ate on that, given those assumptions would be 11437 / 124000 = 9.2%
Expert:  Lane replied 1 year ago.
P.S
If your disability is Social Security disability, this would make 1/2 of that taxable ... we should add in another 9000 to your taxable income .. making a little more of the gain taxed ... and 9000 of you social security taxed (but only in the year you have that gain).
Make sense?
Here's an excellent article on how these two things interplay:
http://.com/tax-on-capital-gains-while-receiving-social-security-benefits.html
Let me know if you have questions...
lane