The Capital Gains Tax Calculator - Anyone Can Do It

December 1, 2004
By Srinidhi Goenka

There a lot of ways in which you can calculate your capital gains tax. On a large number of websites, there are many calculators in which you can simply type in your gains and losses and get an estimate of the amount of capital gains tax that you will have to pay. Such a calculator for capital gains tax can either be a simple one in which only the basics are required or a more complicated one in which several figures need to be punched in.

But before you choose to calculate your capital gains tax in such a manner, it is important that you should know your basic totals correctly, otherwise you might be in for a shock when you visit the IRS.

It is always better to do the sums first by yourself and then verify it through these calculators.

Calculators Useful for Determining Sales Strategy
However, these calculators can be very useful in helping you to determine your strategy for sales, especially in the case of shares and stocks.

For example, suppose you bought Stock A at $30 per share. In one year's time, the value of your stock has increased to $50. Now you think that the value is likely to fall. So the questions is whether you should sell now and pay nearly double the capital gains tax or keep it for some more time and take advantage of a lower tax rate.

Normally, you would have to sit with a pen and paper and then make several permutations and combinations before you came up with the best solution. However, in these calculators, you simply key in your federal tax rate, the sale price for one year, the sale price of the stock is held beyond one year and your state tax rate. And, within a split second, you can get all the answers.