Capital Gains and the W-4 worksheet

[zetta]

I'm trying to fill out a new W-4 for 2007, using www.paycheckcity.com. I'm confused about how to account for long-term capital gains.

Do I include them as part of my non-wage income (line 6)? The form lists dividends and interest as examples of non-wage income. As I understand it, dividends and interest are taxed at the same rate as income, while long-term capital gains are only taxed at 15%, which would lead me to believe I shouldn't combine them.

I have to admit that having enough capital gains to worry about is a nice problem to have!

[zetta]

Re: Capital Gains and the W-4 worksheet

Bump. Anyone? Anyone?

[bjl584]

Re: Capital Gains and the W-4 worksheet

I thought that you needed a 1099 form to report capital gains????

[kv968]

Re: Capital Gains and the W-4 worksheet

I thought that you needed a 1099 form to report capital gains????

Yes a 1099 form will show you the capital gains to be reported when filing a tax return. A W-4 is a form that allows your employer to withhold the correct federal tax from your pay so just an estimate of future capital gains is needed.

[sweeps]

Re: Capital Gains and the W-4 worksheet

I think zetta is trying to figure out how many exemptions to claim. zetta: The withholding calculators are only useful for relatively simple tax situations. If you file schedules (including schedule D) with your taxes, you might as well forget the withholding calculators out there.

Estimate the best that you can at the beginning of the year. Then a couple times during the year do a dry run of your taxes and see if you're overwithholding or underwithholding and adjust your withholdings accordingly.