Question about stocks and taxes

[Argo]

Whenever I do my taxes, especially schedule D it always asks if I help the particular stock for longer than a year or if it was a short term investment. Are there different tax rates for the two?

 

[dsfunk]

yes

 

[Argo]

Originally posted by: dsfunk
yes

Any idea what the difference is?

 

[Trygve]

Tax rates on long-term gains are substantually lower than the rates on short-term investments, but the applicable rate depends on your income level as well.

http://www.bankrate.com/brm/itax/tips/20010305a.asp has a quick discussion about it, though, as always, anything that's already been printed or is up on the web may be out-of-date when it comes to tax law.

 

[Jeff7181]

From TaxCut 2004...

Last year congress introduced a new era of favorable tax rates on capital gains. Starting on May 6, 2003, long-term capital gains received a tax rate cut from 20% down to 15% (from 10% to 5% for tax payers in the lowest tax brackets.)

For 2004, the 15% (or 5%) rate will apply to all of your long-term capital gain income.