Solved: I was in the 15% bracket in 2016 and thought long term capital gains were not taxed but my 1040 shows the LT gains as income. What am I missing?
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I was in the 15% bracket in 2016 and thought long term capital gains were not taxed but my 1040 shows the LT gains as income. What am I missing?

 
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Level 15

I was in the 15% bracket in 2016 and thought long term capital gains were not taxed but my 1040 shows the LT gains as income. What am I missing?

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.  

For the Desktop version you can switch to Forms Mode and open the worksheet to see it.  Click Forms in the upper right (upper left for Mac) and look through the list and open the Qualified Dividends and Capital Gain Tax Worksheet.

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Level 15

I was in the 15% bracket in 2016 and thought long term capital gains were not taxed but my 1040 shows the LT gains as income. What am I missing?

Well they are income and should be listed on the form 1040 as such ... however what you need to look at is the tax calculation worksheet to see how the tax was figured.
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New Member

I was in the 15% bracket in 2016 and thought long term capital gains were not taxed but my 1040 shows the LT gains as income. What am I missing?

Thanks for the quick response.  Very helpful and now I understand.  Sure glad I use TurboTax.
Highlighted
Level 15

I was in the 15% bracket in 2016 and thought long term capital gains were not taxed but my 1040 shows the LT gains as income. What am I missing?

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.  

For the Desktop version you can switch to Forms Mode and open the worksheet to see it.  Click Forms in the upper right (upper left for Mac) and look through the list and open the Qualified Dividends and Capital Gain Tax Worksheet.

View solution in original post

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