In this episode, Dr. Friday explains how capital gains tax works, why your total income matters, and the hidden tax rate many forget about.
Transcript:
G’day. I’m Dr. Friday, president of Dr. Friday’s Tax and Financial Firm. To get more info, go to www.drfriday.com. This is a one-minute moment.
Capital gains tax. A lot of people come in asking me, “Hey, if I sell this, what happens?” Remember, capital gains tax isn’t a separate tax—it’s based on your overall income.
Let’s say you make $100,000, and then you sell something for a $150,000 gain. If you’re single, $50,000 of that gain is going to be taxed at 18.8%—not 15%.
Even though the tax code says anything between $47,000 and $518,000 falls in the 15% bracket, many forget about the net investment income tax of 3.8%. Don’t forget that part!
You can catch the Dr. Friday Call-In Show live every Saturday afternoon from 2 to 3 p.m. right here on 99.7 WTN.