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UPS Retirement Topics
Need advice from future retirees or retired.
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<blockquote data-quote="Red Headed Stranger" data-source="post: 5413641" data-attributes="member: 90351"><p>Actually, long-term capital gains are more tax advantageous than ordinary income. </p><p></p><p>Ordinary income tends to include items such as wages, tips and interest income. Capital gains arise when you sell a capital asset such as a stock, home, apartment or condo for more than its purchase price, or taxable basis. If this asset is sold within 1 year of purchase, the gain is short term and is taxed at the higher ordinary income rate. If it is sold after 1 year of purchase, it is taxed at the discounted long-term capital gains tax rate instead.</p><p></p><p>Long story short: Ordinary income taxes are applied to wages and income, interest earnings, and short-term capital gains. By way of contrast, capital gains taxes are a <strong>favorable tax treatment</strong> that lowers taxes on profits made through investment activities that are designed to encourage investors to buy and hold capital assets.</p><p></p><p>Capital gains tax rates are 0% if you earn below $83,350 per year, 15% between $83,351 and $517,200, and 20% if you earn over $517,200 for married spouses filing jointly. If you were taxed at ordinary income tax rates, you would be paying a much higher tax rate in most cases. <strong> Remember, long-term capital gains ARE YOUR FRIEND!</strong></p></blockquote><p></p>
[QUOTE="Red Headed Stranger, post: 5413641, member: 90351"] Actually, long-term capital gains are more tax advantageous than ordinary income. Ordinary income tends to include items such as wages, tips and interest income. Capital gains arise when you sell a capital asset such as a stock, home, apartment or condo for more than its purchase price, or taxable basis. If this asset is sold within 1 year of purchase, the gain is short term and is taxed at the higher ordinary income rate. If it is sold after 1 year of purchase, it is taxed at the discounted long-term capital gains tax rate instead. Long story short: Ordinary income taxes are applied to wages and income, interest earnings, and short-term capital gains. By way of contrast, capital gains taxes are a [B]favorable tax treatment[/B] that lowers taxes on profits made through investment activities that are designed to encourage investors to buy and hold capital assets. Capital gains tax rates are 0% if you earn below $83,350 per year, 15% between $83,351 and $517,200, and 20% if you earn over $517,200 for married spouses filing jointly. If you were taxed at ordinary income tax rates, you would be paying a much higher tax rate in most cases. [B] Remember, long-term capital gains ARE YOUR FRIEND![/B] [/QUOTE]
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