In that case, you can deduct the total losses on your tax return, up to $3,000 per year.

While most securities held over one year qualify for the favorable rate on long-term The complex federal tax code provides a few ways, depending on your income, personal financial goals, and even your health, to defer or pay no capital gains tax. But the amount you owe depends on several factors.First, determine how long you owned the stock before selling it. That avoids the capital gains tax completely. No problem. That same rate applies to the portion of gain on the sale of … If your income is between $39,376 to $434,550, you’ll pay 15 percent in capital gains taxes. The IRS taxes capital gains at the federal level and some states also tax capital gains at the state level. First, there are two different ways your stock gains may be taxed. For example, if you purchased the stock 10 years ago for $1,000, and you reinvested dividends each year, totaling $200, your total basis is $1,200. Capital gains taxes apply when you sell a stock or other assets, and they are generally lower than your regular tax rate.

The income thresholds for the 0% rate are indexed for inflation:Before you believe you quality for this special 0% capital gains rates, or think you can shuffle your stock to someone else in a lower tax bracket who can sell to get the 0% rate, you want to be sure you don’t trip over the tax rules.

And if your income is $434,551 or more, your capital gains tax rate is 20 percent.When you sell a stock at a profit, you probably do owe capital gains tax, but not on the full amount of the sale. Under the Tax Cuts & Jobs Act, which took effect in 2018, eligibility for the 0% capital gains rate is not a perfect match with the income ceiling for the 12% income tax rate. If you sell the stock this year for $2,000, your net gain is $800, and that’s the amount on which you’ll owe capital gains taxes.What if you didn’t purchase the stock yourself, but you inherited it from a relative or received it as a gift? Capital gains taxes apply when you sell a stock or other assets, and they are generally lower than your regular tax rate. The basis for an inherited stock is its fair-market value on the date of death of its previous owner. Instead of selling the appreciated stock, paying the capital gains tax, and then donating the cash proceeds, just donate the stock directly. If someone gave you the stock as a gift, the basis is the lower of the fair market value on the date the gift was made, or the original price your gift-giver paid for the stock.After subtracting your basis from your profit, you may also be able to lower your taxable capital gain by deducting management fees. For example, the net gains from your stock sale count against the income limit. To be “qualified,” the dividends must meet certain criteria, such as they must be paid by a U.S. corporation or qualified foreign corporation and you must have held the stock for more than 60 days.Any dividends you earn in a qualified retirement account, such as an If you sell a stock or other investment asset for a profit, you will owe capital gains tax. In Opinions expressed by Forbes Contributors are their own.I make the law and the tax code understandable to everyone The profit you make when you sell your stock (and other similar assets, like real estate) is equal to your capital gain on the sale. To make sure you’re paying taxes appropriately on your stock gains, be sure to keep track of how long you’ve held the stock and the amount you’ve invested in it.Nancy Mann Jackson writes regularly about personal finance and business.

Gains on investments held for a year or less are treated as short-term capital gains, which get the same tax rate as ordinary income. Called Planning to make a big donation to a qualifying charity?