Capital gain tax for married filing joint is incorrect

[yhuang60]

I was trying to find out if the following information is working with TurboTax and used the TurboTax 2023 to verify. TurboTax 2023 gave me a huge tax instead of tax free for proving the below:

In 2023, for taxable income below $89250 a married couple filing joint income tax return does not have to paying any taxes on long-term capital gains

[Bsch4477]

You are correct but remember that the capital gain is included in income when calculating taxable income. 

[Opus 17]

Sorry, your understanding is incorrect.  The income stacks, and the total income (including capital gains) determines the capital gains rate.

For example, suppose your income not including capital gains is $80,000.  The first $9,250 of capital gains is taxed at zero %, but the rest (which brings your income over $89,250) is taxed at 15%. 

[yhuang60]

I did a search on-line using "In 2023, how much taxable income a married couple can have maximum without paying any taxes on long-term capital gains" and from bankrate.com came the following:

Long-term capital gains tax rates for the 2023 tax year

  

FILING STATUS	0% RATE	20% RATE
Married filing jointly	Up to $89,250	Over $553,850

The only input I entered into TurboTax to get this correctly is only if either of them or both of them is/are 65 and older. But according to the the above data, it should also apply to other couples younger than 65.

[rjs]

bankrate.com is not the tax law. The information that you posted from bankrate.com is oversimplified and incomplete. In particular, it does not say what the dollar amounts in its chart refer to. As others have told you, the dollar amounts are taxable income including the capital gains. The information from bankrate.com also does not explain that long-term capital gains are not all taxed at the same rate. The rates are applied in brackets, as in the example that Opus 17 gave. Importantly, the chart from bankrate.com omits the 15% bracket. Your capital gains could straddle more than one bracket, so that some is taxed at 0% and some at 15%.

I assure you that TurboTax is doing the calculations correctly. Any discrepancy that you find is due to your misunderstanding of how the tax is calculated.