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I will provide a rough estimate.Assuming you are filing a joint tax return - both below 65
regular income $75,000 plus
long term capital gain $610,000
Assuming - standard deduction - no dependents - no other deductions or credits
Adjusted Gross Income (AGI):$685,000
Personal Exemptions:$0 - eliminated because of high AGI
Taxable Income $672,400
Alternative Minimum Tax:$23,574
Net Investment Tax:$16,530
Total estimated federal Tax liability $138,167
Please let me know if any assumption should be corrected.
Are Capital Gains added onto regular earnings for the AGI?
Yes - capital gains are reported on form 1040 line 13 and are added to AGI.
Are the gains taxed at a different rate that earned income?
Yes - for long term capital gains (when assets are held more than a year.
We would need to use a special worksheet to calculate tax liability using lower tax rates.
Also, what then is the California tax liability?
California doesn't have reduced rate for long term capital gain - so regular tax rates would apply.
Based on above assumptions - your estimate CA state income tax liability is $ 60,700
As you likely itemize - that will reduce your tax liability.
So be sure to pay all deductible expenses before the year end.
Let me know if you plan any deductions - and I will help to verify how these will affect your expected tax liability.
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