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Capital gains tax has long been the nemesis of investors. No one wants to share their profits with the government. After all, it is the investors who determine where to put their hard-earned money, and why should a smart decision on their part benefit our government? Of course, the IRS sees this differently and continues to feel entitled to a share of the profit.
This year and for at least two more, investors in specific tax brackets are receiving a break and have cause to celebrate. If you meet the requirements, this is a wonderful opportunity to enjoy your investment profit without paying the capital gains tax.
Taxpayers who are holding stocks and bonds and are interested in cashing them out in the near future, have an opportunity to avoid the capital gains tax entirely from 2008 through 2010. This break could be extremely beneficial for seniors who would like to tap into some of their savings without having to pay the government taxes on the profit they’ve made. As with all such laws, there are restrictions to first take into consideration.
This opportunity is only available to single people with taxable income under $32,500. For married couples, the taxable income limit is $65,100. The catch to this is that you can only qualify for zero tax if your withdrawal, added to your annual income, keeps you within the income limits previously stated. Once you exceed these limits, the 15% capital gains tax will again apply.
It would be a good idea to begin making these withdrawals as soon as possible, so you will be able to maintain the limits while taking advantage of this recent change. This change is, at this time, only in effect from 2008 through 2010, and there is no guarantee that it will be extended.
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