Can Capital Gains Push Me Into a Higher Tax Bracket?

Most of us generally understand how taxes and capital gains taxes work. Also, we understand that ordinary income is taxed on one schedule and capital gains are taxed on another schedule.

The question is, will capital gains increase the taxes I pay on my ordinary income? We also want to know what is the difference between short-term capital gains and long-term capital gains.

In today's video, James Conole is going to help you understand how capital gains impact the taxes you pay on the rest of your income and whether will it push you into a higher tax bracket.

Learn the tips & strategies to get the most out of life with your money.

⏰ TIMESTAMPS
00:00 - Introduction
1:50 - Capital Gains Tax
3:15 - Capital Gains Taxes Explained
5:25 - Ordinary Income v. Capital Gains
7:31 - Tax Planning Strategies
8:33 - Tax Brackets & Tax Rates

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[gregrohrer]

This is the best explanation of capital gains I have ever seen! No one on YouTube has explained this as well.

[tcc]

This video is helpful, but it's still a very confusing topic. Thank you, IRS! The key is to understand the terminology
AGI includes income, short term gains and long term gains. Note this assumes you have gains. If you also took some short term and long term losses those would be netted agains the gains. The net amounts are what gets counted (i.e. losses are written off and not counted as income).
Total Taxable Income = AGI minus deduction
Ordinary taxable income = income + short term gains - deduction. This gets taxed based on the Federal Income tax brackets
Long term gains are taxed using the Capital Gains Tax brackets. In the example, the 0% capital gains tax applies for taxable income up to $83, 350. $74, 000 is already used up as ordinary income so that leaves 9, 350 of capital gains to fill the 0% bracket. The remaining capital gains of 90, 650 is then taxed at 15%.
Here's another good video on the topic

[azcoach]

Finally I found someone who explained it in detail. I was assuming way more in taxes then what I will have to actually pay. This was perfect thank you!

[incognitotorpedo]

James, you are a really great communicator.

[chiparooo]

Just the info I needed. Thanks for sharing!

[msinoyumi]

Thank you for the wonderful Info. Your explanation is the best!

[tigertoo]

Fantastic explanation. I've never really had a clear understanding of how capital gains figure into tax calculation before. Thank you so much, James Conole! This video helps immensely.

[bh_bh_]

Great video this helps a lot !! Thank you Sir. Great communication and educational skills.

[rrgogna]

Very well explained everything, thank you for content

[mckeefamily]

There should have been way more views and likes on this video! Very clear explanation

[jaketyler]

great video, clear and concise with good enunciation

[ayikatho]

OMG!!! This is exactly applicable to my situation! I was just doing research on this last week! Your video explains the situation so clearly! Thank you so much James!!!🙏🏾🙏🏾🙏🏾🥰

[WingZeroType]

Holy crap man, I need to go buy a click farm and spam likes on this video b/c after a few hours of searching you're the only one that has realized people need to understand how capitals gains and ordinary income interact with each other, not just separately. Thank you for this clear and concise explanation of this topic, including examples using numbers crossing ordinary income and capital gains tax brackets. I can see you've put some thought into the example you chose and it's really really appreciated.

[janethunt]

You answered my exact question. We live in the 12% bracket which I want to max out with Roth conversions. I'd love to sell some taxable mutual fund shares, but I'm not interested in paying 15% tax, so I'll hold off on that.

[DanburyDK]

I wish I had a guy like you helping with my taxes 😢

[fredwang]

Wonderful info, I always wondered how my qualified dividend and capital gains are going to affect my tax bracket! Thank you !

[cdf]

Excellent and timely, thanks. But you missed the Elephant of Depreciation Recapture, which is definitly taxed at another, seperate rate, right?

[rzhang]

I always love your videos. You explain the things very well and provide a lot of good information that benefits us. One question, if I also had the capital loss and capital gains, how the calculation would be? Would the gains minus the loss first and then apply to the tax bracket rules? Or vice versa?

[svlwtlz]

Thanks for the helpful video. What would the tax calc for the income tax and LTCG tax on an example where the ordinary income is same as the standard deduction of $27, 700 (MFJ) and a LTCG of $125, 000? Tax on ordinary income would be $0 and tax on LTCG would be (0% * 89, 250)+(15% * 35, 750) = $5, 363 ?

[benzun]

good stuff very helpful as we are selling some property. ON short term capital gains on the sell of real estate is that taxed as ordinary income if your AGI is less that 50k?. please help