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Presidential candidate Mitt Romney's tax returns have called attention to capital gains. As you probably now know, capital gains are usually taxed at a lower rate than other types of income -- but they're not just for the super-rich.
Anyone with a capital asset can claim a capital gain when that asset is later sold, according to the Internal Revenue Service. A "capital gain" is how much money you made by selling the asset. (However, if you lost money in the deal, and it's investment property, it's called a "capital loss.")
So what is considered a capital asset? And can you claim the sweet 15% capital-gains tax rate like Mitt Romney does?
The answer depends on many factors, and involves some arithmetic. Here's what the IRS says about capital gains and taxes:
Net capital gains are taxed at different rates for different taxpayers. The maximum rate for most people is 15%, but for those with lower incomes it could be as low as zero. However, some types of net capital gain may be taxed at higher rates of 25% or 28%.
See how complicated it can get? That's why it may be wise to consult a tax attorney about your best options for reporting capital gains on your taxes, even if you're not as rich as Mitt Romney.
Meeting with a lawyer can help you understand your options and how to best protect your rights. Visit our attorney directory to find a lawyer near you who can help.
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