Viewing a single comment thread. View all comments

TheyReadALot OP t1_j2f5p14 wrote

Thanks so much!

To clarify, is it the case that when calculating your total taxable income for capital gains tax rate calculations, you should do so *after* removing the standard deduction from your income?

To continue the example, if my income was $40,000 and the standard deduction is $12,950, I wouldn't actually pay any capital gains taxes until I earned >$14,626 in capital gains (which would make my income $54,626 - minus the deduction of 12,950 =$41,676 the capital gains income threshold).

Thank you again for your help!

1

pancak3d t1_j2f6603 wrote

Correct. The standard deduction reduces your taxable income.

2

TheyReadALot OP t1_j2f6y6d wrote

Woo hoo! This makes things much less stressful as I'm trying to figure out our tax situation and adds SO much clarity. Thanks so much for your help.

1