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Example for 2019 US taxes: let's say a single filer made $10,000 in ordinary income and $35,000 in long term capital gains. Would they pay $0 in taxes?

From my research, it's a 0% tax rate on long term capital gains from $0-$39,375 for a single filer. Also, there's the standard $12,200 deduction on ordinary income.

Are these calculations correct to pay $0 on 2019 taxes?

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Yes, that's correct. You could make up to $12,200 in ordinary income and up to another $39,375 in long-term capital gains, and pay $0 in federal income tax for 2019. You would still owe Social Security and Medicare taxes on the $12,200 though (assuming it's earned income, like from a W-2 job), as well as possibly state and local income taxes.

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  • Can you point me to a resource on how to calculate Social Security and Medicare taxes? – grizzam527 Apr 12 '20 at 0:26
  • You owe SS&Medicare only for earned income: either from a job (wages etc including tips) or a trade or business (profit). Not for other taxable income including: short-term cap gains, dividends, interest (unless exempt), pension/IRA or other deferred comp, rents & royalties, gambling winnings, lawsuit award or settlement (other than physical injury, which is tax-free), cancellation of debt (with some exceptions), alimony not awarded or modified after 2018, or jury pay. At this (low) level it's simply 15.3%, see Schedule SE and its instructions. – dave_thompson_085 Apr 12 '20 at 3:25
  • @grizzam527: If you're self-employed, the instructions for Schedule SE. Otherwise your employer should deduct it from your pay. 7.65% up to $137,700, then 1.45% up to $200K, 2.35% on amounts above that: adp.com/resources/articles-and-insights/articles/e/… – jamesqf Apr 12 '20 at 3:30
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Zero tax on $39375 in long-term capital-gains is correct if the total taxable income is $39375.

However, bullion ETF's based on physical bullion owe a collectibles long-term capital-gain tax rate of 28% except that a foreign ETF based on physical bullion might be classified as a PFIC and then filing a Form 8621 avoids the collectibles long-term capital-gain rate.

Or bullion ETF's based on futures avoid the collectibles long-term capital-gain rate. Bullion ETN's avoid the collectibles long-term capital-gain rate.

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  • I could have said there is a zero long-term capital-gain rate up to $39375 in total taxable income except for certain situations of real estate and except for certain situations of collectibles including bullion but I knew the details of bullion in three sentences. – S Spring Apr 12 '20 at 0:55

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