<title>Set your tax bracket for estimating capital gains</title>
<category fLocale="cdn">lifeplan</category>
<klink type="prcdr">How do I set my tax bracket for estimating capital gains?</klink>
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<content>
<ol>
<li>On the <emph>Taxes</emph> menu, click <emph>Capital Gains Estimator</emph>.</li>
<li>In the left pane, click <emph>Set tax rates</emph>.</li>
<li>In the <emph>Select your filing status</emph> box, click your tax filing status.</li>
<li>In the <emph>Select your income bracket for this tax year</emph> box, clck the income range that includes your income level, or click <emph>Custom rate</emph> and type your short-term and long-term capital gains tax rates.</li>
<li>Follow the instructions on the screen.</li>
</ol>
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<footer>
<extend>
<tease>Why and how should I use a custom tax rate?</tease>
<reveal>
<p>Set a custom tax rate if your tax filing status is not covered by the options in the <emph>Select your income bracket for this tax year</emph> box. In the box, click <emph>Custom rate</emph>, and enter the appropriate short-term and long-term capital gains tax rates. </p>
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<extend>
<tease>When I'm looking for my tax rate, should my income level include the capital gains from the sale of my investments?</tease>
<reveal>
<p>Yes. If your sale pushes you into a new tax bracket, the new rate is the rate at which your capital gains will be taxed.</p>
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<extend>
<tease>Why doesn't Money just use my effective income tax rate to estimate capital gains?</tease>
<reveal>
<p>First, long-term capital gains are taxed at a maximum of 20%. Second, short-term capital gains are taxed at your <glossary>marginal rate</glossary>, not your <glossary tNum="286989">effective income tax rate</glossary>. You determine the marginal rate when you click <emph>Set tax rate</emph> and the marginal rate is the one that appears in the <emph>Results</emph> section.</p>
</reveal>
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<extend>
<tease>Does the tax rate include any state income taxes I might have to pay?</tease>
<reveal>
<p>By default, Money includes only the federal capital gains tax. Some, but not all, states tax capital gains as income. If your state is one of them, you can enter the applicable rates under <emph>Do you want to estimate your state income tax on capital gains</emph>.</p>
