Tax time is just around the corner. Just what we needed, right? Next time I’ll remind you about your dentist appointment. You’re welcome. Anyway, one of the things the IRS has you report are your capital gains. What is that? Don’t worry. I gotcha covered.
Here’s Five Fast Facts you need to know about capital gains:
- 💰 Dollars and Sense - A capital gain is what you get when you sell something for more than what you spent on it. That also includes ALL the money you had spent on it, including things like sales tax or shipping and handling.
- 🏠 Homeboy - Before you panic, if you just sold your house, the tax code lets you exclude some, or all of that gain as long as you meet certain conditions. I’m not a tax pro, so you’ll have to talk to an accountant about the rest.
- 🌭 Length Does Matter - If you sell an asset after you’ve had it for more than a year, it qualifies as a long term gain. Less than a year, it’s a short term gain. Because we’re talking taxes here, that also factors into how much you’re taxed. Again, talk to a smarter person.
- 📉 Loss and Gain - Here’s where fancy money comes in. If you sell an investment for less than how much it costs, it’s a capital loss. Here’s the catch, though: personal property does not count in this situation. We’re talking about investments only, here.
- 💵 Mind Your Business - Finally, if you’re running a business that buys and sells, your sales are considered and treated as business income. So there’s no escaping the tax man on that one.
🔥Bottom line: If you’re thinking Capital Gains are in a weird gray area when it comes to taxes and exemptions, you are correct. Above all else, Capital Gains taxes are more for wheeler-dealers than anything else. But who knows? You might qualify. Talk with a tax pro about your questions.
Do you have anything that qualifies as a capital gain?
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