Yesterday I sold covered calls on and now it's right on the money. I'm worried about getting assigned and having to pay taxes on the stocks. Should I close the position now before that or should I just wait for it to go back down?
Question - does capital gains tax consider an individual's overall income/tax brackets or is it entirely separate than your income taxes?
Reason I'm asking is that it usually pops up when I do my income taxes and somehow I always thought they're linked.
Your capital gains tax bracket is in direct relation to your taxable income for the year. Here's the IRS page for it:
I think the question is what's your cost basis and premium? Basically, is your profit from the premium (minus taxes) more than the capital gains taxes on the stock sale?
If yes, let it ride
If not, close it and run