Capital Gains

Profit from selling an asset (stocks, crypto, property) for more than you paid. Taxed differently depending on how long you held it.

Full explanation

A capital gain occurs when you sell an asset for more than its cost basis (what you paid for it). Short-term capital gains (assets held one year or less) are taxed at your ordinary income rate. Long-term capital gains (held over one year) get preferential rates: 0%, 15%, or 20% depending on your taxable income. Capital losses can offset capital gains, and up to $3,000 of excess losses can offset ordinary income per year.

Source: IRS Publication 550 — Investment Income and Expenses

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“How does capital gainsaffect my taxes?”

Tax education only. Source: IRS Publication 550 — Investment Income and Expenses.