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New Member

Are my Capital Gains Tax higher than on tax bracket?

My wife and I only made $36,215  in 2017, filling jointly. We sold a piece of land for $17,000 that we bought for $7,900 in 2014,  Long term capital gains is about $9100 (thats taxable). When I go  enter the information, my tax refund drops from $6925 to $3898, putting the Capital Gains Tax at about 44%!!!!  Is that right?!?!
With all of our income and profits from the sale of the land $53,215, we still come in at 15% tax bracket, WAY BELOW the next bracket of 25%. SOMETHING DOESNT ADD UP HERE, LITERALLY. Can someone help?
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Level 15

Are my Capital Gains Tax higher than on tax bracket?

By increasing your income you may have lost some credits like the EIC and Child Tax Credit or Child Care Credit.  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.

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8 Replies
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Level 9

Are my Capital Gains Tax higher than on tax bracket?

Do you have dependent children (three would be my guess)?
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Level 7

Are my Capital Gains Tax higher than on tax bracket?

Or do you have Social Security income?
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Level 15

Are my Capital Gains Tax higher than on tax bracket?

36+9 is 45 not $53,215 so yes something does not add up.
after deductions it should be much less than 45.

You'd better review your entries again.
OR
You are leaving out some important information.Why was your refund so big without the land sale ?
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New Member

Are my Capital Gains Tax higher than on tax bracket?

Yes we have 2 children,

no Social security income

9 is exactly what should be taxable capital gains, but I put it as 17 because I read that the IRS will count it as your "total" income as a whole to figure out your tax bracket, THEN use that bracket to figure out  your capital gains % on the 9. Either way I should not be over 15% tax bracket. Maybe the turbotax  software is not using the right % ??? Thats an average tax return for us. I knew I would take a hit on capital gains this year, but this doesn't seem right at all.

our taxes consist of 2 W-2s and the land sale, pretty basic, so ive doubled checked everything many times over. Im thinking it might be a software issue at this point.
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Level 15

Are my Capital Gains Tax higher than on tax bracket?

By increasing your income you may have lost some credits like the EIC and Child Tax Credit or Child Care Credit.  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.

View solution in original post

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Level 9

Are my Capital Gains Tax higher than on tax bracket?

As VolvoGirl pointed out, that 'extra' income can change a lot of other things on your tax return, including the Earned Income Credit.

A married couple with 2 children with $36,215 of earned income could receive an Earned Income Credit of $3027.  The sale of the land is "Investment Income", and that eliminated the $3027 credit.  That EXACTLY accounts for the $3027 change in your refund.
<a rel="nofollow" target="_blank" href="https://www.irs.gov/publications/p596#en_US_2017_publink1000297452">https://www.irs.gov/publications...>
<a rel="nofollow" target="_blank" href="https://www.irs.gov/pub/irs-prior/i1040gi--2017.pdf#page=67">https://www.irs.gov/pub/irs-prior/i1040...>
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New Member

Are my Capital Gains Tax higher than on tax bracket?

@VolvoGirl @TaxGuyBill  I think you guys are right with the articles you linked and trying to qualify for the EIC, a questions comes up that asks, "was investment income more than $3400? for 2017" which in this case, yes, $9,000. It says that I DO NOT qualify for the EIC. That MUST be it. so most likely I'm actually being taxed at 0% for capital gains since my income was so low this year. but with NO EIC, the refund drops.
Thanks so much for the help guys, I really appreciate it.
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Level 15

Are my Capital Gains Tax higher than on tax bracket?

Here's some more info.....
Even though the full amount shows up as income on the first page of the 1040 or 1040A, if you have capital gains or qualified dividends the tax on line 44 (or 28) is not taken from the tax table but is calculated separately from schedule D.  The tax will be calculated on the Qualified Dividends and Capital Gain Tax Worksheet.  It does not get filed with your return.  In the online version you need to save your return as a pdf file and include all worksheets to see it.
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