If your income is low enough, you avoid capital gains tax

— -- Q: If my 2008 total income is $65,100, $20,000 of which is wages and $45,100 is capital gains, do I have to pay taxes on the capital gain?

A: While stocks have been falling all year, 2008 brings a bit of good news from Uncle Sam.

This tax year, for the first time in recent history, some investors may be able to completely avoid paying taxes on appreciated assets they've owned more than a year. It's an opportunity that doesn't come along often.

To qualify, taxpayers must fall in the 10% or 15% income tax brackets. For a married couple, that would mean taxable income must be $65,100 or less and single filers must earn $32,500 or less. And yes, to answer your question directly, your $45,100 in capital gains are counted as taxable income.

This potential tax break currently is slated to last until 2010, according to PriceWaterhouseCooper's 2008 Guide to Tax and Financial Planning. There may also be some addition considerations regarding the Alternative Minimum Tax. You should consult a tax professional or tax planning software for more information on how these tax changes may affect your personal situation.

You can get more general details here in Sandra Block's column written for tax year 2007.

Matt Krantz is a financial markets reporter at USA TODAY and author of Investing Online for Dummies. He answers a different reader question every weekday in his Ask Matt column at money.usatoday.com. To submit a question, e-mail Matt at mkrantz@usatoday.com. Click here to see previous Ask Matt columns.