long term gains effect on taxable income

Forum|Forum|4 years ago
January 26, 2022
2 replies
19 views

to calculate taxable income does long term gains are taken into account which can change tax bracket.

here is my scenario:

wages: 159000

short-term gain: 372000

long-term gain: 188000

qualified divided: 6404

interest: 57

AGI: 725461

based on these numbers how to get taxable income

Best answer by ColeenD3

The best way is to just enter the information into the tax return and allow the program to do the calculations.

Long-term gain is calculated separately on a Schedule D supporting worksheet.

Please see this previous answer from @HalAl

Salary + ST capital gain first. Then subtract your deductions (itemized or standard) & exemptions.

Then subtract that number from $72,500. The difference will be how much of your LTCG are taxed at 0%. The rest will be taxed at 15%.

So, based on what you said and assuming the standard deduction and 2 exemptions (no kids):
50,000 salary
+20,000 STCG
- 12,200 Standard deduction
- 7,800 two exemptions
= 50,000 "ordinary" taxable income

72,500
- 50,000
22,500 Long term capital gains not taxed (taxed at 0%)

30,000 total LTGC
-22,500
=7,500 LTCG taxed at 15%

None of your income will be taxed at more than 15%, because your ordinary taxable income is less than $72,500.
See the "Qualified dividends and capital gains" work sheet in Turbotax for detailed calculations

ColeenD3Answer

Level 15

The best way is to just enter the information into the tax return and allow the program to do the calculations.

Long-term gain is calculated separately on a Schedule D supporting worksheet.

Please see this previous answer from @HalAl

Salary + ST capital gain first. Then subtract your deductions (itemized or standard) & exemptions.

Then subtract that number from $72,500. The difference will be how much of your LTCG are taxed at 0%. The rest will be taxed at 15%.

So, based on what you said and assuming the standard deduction and 2 exemptions (no kids):
50,000 salary
+20,000 STCG
- 12,200 Standard deduction
- 7,800 two exemptions
= 50,000 "ordinary" taxable income

72,500
- 50,000
22,500 Long term capital gains not taxed (taxed at 0%)

30,000 total LTGC
-22,500
=7,500 LTCG taxed at 15%

None of your income will be taxed at more than 15%, because your ordinary taxable income is less than $72,500.
See the "Qualified dividends and capital gains" work sheet in Turbotax for detailed calculations

Mike9241

Level 15

taxable income is your adjusted gross income less either your itemized or standard deduction. in addition it can be further reduced by any QBI deduction

basically your non LTCG and qualified dividend income less your standard or itemized deductions get taxes as if that was your only income. however, the ordinary income pushes the LTCG and Qualified dividends into the 20% bracket. you have significant investment income in excess of $200,000 (varies based on marital filing status) so that excess gets hit with an additional 3.8% tax

Mike9241