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Strategies & Market Trends : Income Taxes and Record Keeping ( tax )
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To: posthumousone who wrote (758)3/16/1998 1:03:00 AM
From: Cents  Read Replies (3) of 5810
 
OFF TOPIC: Things I learned after filing with the taxman today.

I learned:

1. One's income is broken into parts and are subjected to different tax rates depending on the amount. For the first time my husband and I are in the 15% tax bracket (28% previous years) even though he made more money from bonuses. But his taxable income was reduced as a result of his increased contributions to 401K and bc of the increase of the lower tax bracket. The lower tax bracket moves up a little each year adjusting for inflation.

2. Capital gains is taxed at same rate as regular income until you exceed the level for next tax bracket; but then only the portion that exceeds is subjected to the next higher rate. Imagine my surprise when I found out that all my short-term gains for the year (which was not alot to begin with) was taxed at 15% instead of the 40% that I thought it would.

3. The definition of a stock wash is more technical than just the 31 days rule than I had thought. My taxman will look for the true definition for me and I will post it when received. He says to just follow "First In, First Out" (FIFO) rule to avoid stockwashing. So from that, it seems to me that Gary you do not have a stock wash....as long as you keep your transactions separate, your loss is tax-deductible.

4. Stock commissions and losses, Options that expire worthless or contracts sold for a loss are all tax-deductible. This also includes options commissions.

That's about it. The tax session cleared up alot for me, and I hope this post helps some of you.

If I've been misinformed to anything stated above, any response is very much appreciated.

Cents
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