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Short-Term Capital Gains - taxed as same rate of ordinary income or included as ordinary income

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Level 1

Are short term gains counted as (a) "as ordinary income" or are they (b) "taxed at the same rate as ordinary income?"  This is a big difference.  A person with income of $35,000 may be in the 12% tax bracket but with the option of selling stock for a $45,000 Short-Term gain needs to consider the tax consequences of: (a) having that much more ordinary income and have their overage of $40,125 (for single) taxed at 22% or (b) getting taxed at 12% (same rate of ordinary income which excludes the short-term capital gain.)  

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2 Replies 2
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Level 15

Hi there,

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ex-AllStar
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Level 3

taxed at ordinary rates  so portion of your income (w/ short term gain) will be taxed at 10%; portion at 12% and portion @ 22%