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yegor7
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I currently work part-time and have an income of <$10,000 per year. Why is Turbotax telling me that I will be taxed on capital gains even if I fall in the 0% bracket?

 
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3 Replies

I currently work part-time and have an income of <$10,000 per year. Why is Turbotax telling me that I will be taxed on capital gains even if I fall in the 0% bracket?

This is a user to user forum and nobody here knows your tax situation, can see your income tax return or your computer screen.  You also haven't disclosed the amount of the capital gain nor the nature, (long term, short term), of the capital gain.

 

Short term capital gains get tax like "ordinary" income such as wages, interest income and the like, so if the capital gain is short term, it will get taxed if your total income requires that you file an income tax return.

 

Long term capital gains first get taxed at 0% if your total income does not exceed the upper income limit for the 2nd lowest tax bracket.  But if the long term capital gain is of sufficient amount that you exceed that upper limit then the amount of LTCG above the limit is taxed at 15% and then at 20% in the highest tax brackets.

yegor7
New Member

I currently work part-time and have an income of <$10,000 per year. Why is Turbotax telling me that I will be taxed on capital gains even if I fall in the 0% bracket?

Yeah I was not able to go into greater detail due to a character limit on the initial post. This is under the assumption that the asset is held for over a year and that total income does not exceed $10,000. I was trying to do a projection of a hypothetical cryptocurrency boom, under which an initial investment of $5,000 attains a value of $500k. What is the growth limit at which the 0% tax rate on a long-term asset no longer applies?

I currently work part-time and have an income of <$10,000 per year. Why is Turbotax telling me that I will be taxed on capital gains even if I fall in the 0% bracket?

Assuming you're single:

 

Long-term capital gains tax rate Your income

0%                                                    $0 to $39,375
15%                                                  $39,376 to $434,550
20%                                                  $434,551 or more

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