Tax Tips from Stu Steinberg – CPA, National Speaker & Financial Advisor
“Celebrating 25 Years in the Business”
We use IRS form Schedule D to track capital gains, both long and short. There is a big difference between long and short when it comes to taxes, thus the term a year and a day. Here is how it works: First, we report the transaction by listing the number of shares, the name of the investment, when it was bought and for how much, as well as, when it was sold and for how much. A gain or a loss is computed. If the gain is short term, meaning the investment was held less than 1 year, it is taxed at the ordinary income rate, which could be as high as 39.6%, + the potential 3.8% ACA surtax bringing the total tax paid on the item to 43.4%. Then the state has to get factored in!
However, if the asset is held to a “year and a day”, than far more favorable long term gains tax rates are used and the top tax rate would be 23.8% including the ACA tax. The 20+% potential tax savings makes the “year and a day” planning very prominent in many taxpayers lives.
About Stu: With more than 25 years of experience as a credentialed tax professional, Stu Steinberg brings a broad depth of knowledge to his work. Stu founded Erock Tax to help provide tax strategies to individuals, families and small businesses. He uses his CPA expertise to help each client navigate their long-term debt and mortgage, gaining them the best deals and rates possible. Stu is passionate about empowering his clients through education about their tax health. He is highly energetic and brings a sense of optimism, creative problem-solving and a deep level of commitment to every Erock client.