Taxation on capital gains (carry) that I received from former employer ($103,000) that was received Dec 2021.
How is this taxed? I went to H&R Block and they said I’m taxed at about 32%. It was added to my pension, SS and 401K distributions. So instead of getting $5,000 back from the IRS, I owe them $31,000 and $5,100 to IL state plus a $450 penalty for paying late. Does this sound right?
Terry Says
That doesn’t seem quite right. Did you hold the asset for more than one year? If so, it is a LONG-TERM capital gain, and taxed at a maximum rate of 20%. If held for less than a year, then the amount of the gain is added on top of your other income, so the rate could be 32%.
If this asset was long-term, then find a new tax preparer!!
