Yes, you are correct your long-term capital gains will taxed at 0% in your income bracket. The capital gains will be included in your taxable income but the Qualified Dividends and Capital Gain Tax Worksheet is used to calculate the tax. When you look at the worksheet you will see that the long-term capital gain was taxed at 0%.
In the preview of Form 1040 you can verify how your tax was calculated:
- Click on "Tax Tools" in the left menu
- Click "Tools"
- Click "View Tax Summary" in the Tool Center window
- Click on "Preview my 1040" on the left
- Scroll down to "Tax Smart Worksheet" the "Qualified Dividends and Capital Gain Tax Worksheet" should be checked
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