ThomasM125
Expert Alumni

Retirement tax questions

First of all, if you have capital gain income reported on line 7 of form 1040, you must use the Qualified Dividends/Capital gains worksheet to calculate your tax. This can give a much lower tax than you get from using the tax tables, as the tax tables don't use the capital gains tax rates that can be much lower than ordinary tax rates.

 

Also, you mention that the tax on line 16 is coming from line 3 of schedule 2, Part I. This would mean your tax is comming from Form 6251, Alternative Minimum Tax. This tax could be more or less than your ordinary tax. In your case since it is less it is probably associated with the capital gains, as this can have a different treatment for AMT purposes than the ordinary treatment of capital gains.

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