Investors

Long-Term Capital Gains and Dividends

The maximum tax rate on net long-term capital gains remains at 15% for 2010. However, for taxpayers in the 10% or 15% tax bracket, the tax rate on long-term capital gains is zero. Capital gains on investments held for one year or less are taxed at regular income tax rates.

Qualified dividend income from a domestic or qualified foreign company is taxed at a top rate of 15% (zero for taxpayers in the 10% or 15% tax bracket in 2010).

These rates for net long-term capital gains and dividends expired at the end of 2010.

Offset Capital Gains with Losses

Capital losses are netted against capital gains. If your capital losses exceed your capital gains, you can deduct up to $3,000 in net long-term capital losses against ordinary income ($1,500 if married filing separately) or your total net loss as shown in 1040 Schedule D, Capital Gains and Losses, whichever is less. Any remaining net capital losses may be carried over to future years.