Long Term Capital Gains Tax for 2011, 2012

Long term capital gains tax rates are determined by the type of investment asset and the holding period. If you are required to pay long-term capital gains tax, not only are you responsible for the federal tax, but you will be subject to state income tax as well. Most states do not have a separate capital gains tax, but instead they tax as ordinary income.

As of 2008, a zero percent rate is applied to long-term capital gains tax and applies to individuals who fall into the 10% and the 15% marginal tax bracket. This zero percent tax rate is set to expire at the end of 2010, unless Congress extends it. If it is not extended, the long-term capital gains tax will increase to the following amounts per the marginal tax bracket criteria:

• 5% for taxpayers in the 10% and 15% tax brackets
• 15% for tax payers in the 25%, 28%, 33% AND 35% tax brackets

There are several different types of capital assets you can invest in and some are assessed a special tax rate. For example:

• Collectibles – long-term investments in collectibles are taxed at a flat rate of 28%. The following items are considered collectibles:
• Stamps
• Coins
• Precious metals & gems
• Rare rugs
• Antiques (also include alcoholic beverage bottles)
• Fine Art
• Real Estate – If you have sold a second home it may fall under long-term capital gains tax depending on how long you owned your home.

I would recommend using a tax software program to help you estimate the amount of long-term capital gains tax you may be responsible for. The amount you may owe may be substantial and you will want to be prepared for your tax bill. I would recommend TurboTax. TurboTax offers free, online calculators to estimate the amount of tax you may owe per your tax situation.

TurboTax also offers tax professional assistance to answer any tax-related questions you may have. For more information on long-term capital gains tax visit TurboTax Online today.