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Capital Gains Taxation

Learn about capital gains taxes and strategies to reduce liabilities with Wasserman CPA’s expert guidance.


Capital Gains Taxation

Capital gains are earnings from the sale of particular assets, including real estate, stocks or some other investments. We have been doing this for over three decades at Wasserman CPA and so our sole focus in this area is to demystify the complex capital gains tax obligations for individuals.

As for a profit gained from selling certain assets such as real estate or stocks or any other type of investment, and they are considered to be either short-term capital gains or long-term capital gains depending (of course) on the holding period which would lead to particular tax liabilities:

  • Short-Term Capital Gains: Profits from the sale of assets held for 1 year or less. These gains are taxed at ordinary income tax rates which can be much higher.
  • Long-Term Capital Gains: on property kept for a very long time (more than a year). These gains have relatively lower rates depending on the income. Tax Rates.Vary from 0% to 20%

This difference in these types of gain directly correlates to tax liability.


Federal Obligations for the Capital Gains Tax

Certain IRS filing requirements depend on the capital gains being reported as realized. For seamless outcomes, our experts conduct in-depth assessments for every disparate scenario. As a result, this streamlined process has allowed us to ensure our clients’ capital gains taxes are calculated correctly.

Key Forms for Capital Gains Reporting
  • The 8949 form (Sales and Other Dispositions of Capital Assets): This form is for reporting all your transactions for your capital assets. This includes stocks, bonds, real estate and other investments.
  • Schedule D (Form 1040), Capital Gains and Losses: This form acts as a summary of totals from Form 8949 and calculates your total capital gain or loss. It goes as part of the individual tax return (1040).
  • Form 4797, Sales of Business Property: This form must be used to report gains or losses from the sale of property used in a business or trade.
Filing Deadline

The deadline for reporting capital gains is typically April 15 of the year following the tax year in which the gains were collected. Additionally, if the deadline lands on weekends or holiday it will typically get postponed to the next business days. You can also request an extension using Form 4868 for additional time to file until October 15.

Potential Penalties for Late Filing
  • Failure-to-File Penalty: For not filing your return by the due date, the IRS charges a penalty of 5% of the unpaid tax for each month (or part of a month) the return is late, and it maxes out at 25%.
  • Failure-to-Pay Penalty: If the amount owed is not received by the due date the IRS assesses a failure-to-pay penalty of 0.5% per month of the unpaid tax unless you qualify for a reduced rate.
  • Interest on Taxes Not Paid: Merely in addition to penalties, curiosity is being charged on all lost tax from the return due date until the stability is paid in full.
Reporting Foreign Investments

If an individual has capital gains from foreign investments that exceed certain thresholds, there may also be a requirement to file Form 8938, Statement of Specified Foreign Financial Assets and FBAR (FinCEN Form 114).

Estimated Tax Payments

To prevent penalties on capital gains taxes, you may need to make quarterly estimated payments using IRS Form 1040-ES.


Our Process for Managing Capital Gains Tax

We help our clients and guide them through every step of the way to ensure maximum profitability and compliance with IRS rules and regulations. Our process of managing capital gain tax are usually includes:

Initial Consultation

We start with a consultation or quick email chat to understand your unique needs and how we can best support you.

Detailed Portfolio Analysis

We calculate your income gains and losses on your assets and determine the major strategies for reducing your tax burdens.

Tax Strategy Development Specific to Your Needs

After performing our analysis, we create a personalized tax strategy for each unique scenario. Meaning, we will help you choose when to sell your assets, which investments to buy or hold and if you should use a 1031 exchange or reinvestment plan to defer taxes.

Document Preparation and Filing

We take care of all your capital gains tax reporting. This consists of completing Form 8949 and Schedule D plus any other applicable forms such as Form 4797 for the sale of business property. We make sure all forms are correct and filed on time, and we minimize the chances of an IRS audit.

Support and Monitoring Year Round

While many firms only help during tax season, we offer year-round ongoing support. Wasserman CPA experts keep a watchful eye on your investments and notify you about potential tax saving options as market conditions change. We continuously update your strategy in the event of new legislation potentially impacting capital gains obligations.

Review and Client Approval

We sit with our clients to go through all the documents line by line so that before we file the tax returns they know each and every detail. We clarify the results, and based on your feedback will address any concerns and/or make modifications accordingly.

User Support Before Filing and After Filing

After you approve, we then file your tax return. We are here if you have any questions or need help after filing. Especially when the tax authority wants extra, or an audit exists.


Moving Forward With Confidence

Whether you will need to settle your capital gains tax obligations, or if you want to plan out your investments to work around taxes, Wasserman CPA would be happy to help you. George Dimov and Marc Wasserman Leading with decades of experience, our professionals provide straightforward solutions.

Get in touch with us today and allow our decades of experience to work for you. As one of the top firms in South Jersey, we strive to assist clients with taxing and non taxing issues around their capital gains with confidence.

OUR CLIENTS

CLIENTS THAT TRUST OUR SERVICES


Marc has been both my business and personal accountant for several years. During this time I have had a number of small businesses and bought and sold real estate. I know that I can rely on Marc to do the best possible job for me in any financial situation.


JEAN WILCOX



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