When I look at my 1040 the capital gains shows on the capital gains line and appears to flow through to ordinary income and all deductions are taken from that which raises my taxable income that amount. it appears to me that I am paying taxes on the profit of the sale but not a separate tax on just the capital gains. What am I missing?. I have done a practice 1040 and have reduced the non capital gains income and the capital gains and the both go into ordinary income before the deductions give the taxable income. Is capital gains tax above the normal taxes if it qualifies. Sorry but I am having a hard time getting this straight in my head.
