Short term capital gain taxed excessively

[dorox]

Hello,

using TurboTax, when I added the short-term capital gain of 4,900 dollars, my taxed owed increased with aprox 8,000 dollars. My tax bracket has not changed when I added these 4,900 capital gain, we are still in the 32% bracket. Even with a NIIT tax, the amount owed could not increase more than 2k.

What could be the problem?

Thanks!

[VolvoGirl]

When you enter one taxable transaction, you can't just watch the monitor.  You increased your overall adjusted gross income and with that come many other changes in your return, not just the incremental tax on the one transaction.

Like for example it increased your AGI and that would decrease some deductions if you itemized on Schedule A.  And by increasing your AGI it might reduce some credits you were getting like EIC.  And can make more of any Social Security taxable.

You would have to compare both returns line by line before and after you entered the income to see all the changes.

[dorox]

My tax return is pretty simple, just the W2s, some dividents and this short-term capital gain. We use Standard deduction and we do not qualify for any credits. The AGI increased with 4900, but the tax bracket has not changed. And even if the Social Security taxable might have slightly changed, the tax cannot exceed 100% of the gain itself. 

I will do what you suggested, compare both returns line by line before and after I entered the income to see all the changes.

Thank you,