I have made approximately 20,000 USD by selling some stock I have. Since I sold it after owning it for over a year, I thought I would not get taxed at all (tax bracket indicates that capital gain tax of 0% will be applied for profit under 40,000 USD). However, Turbotax is asking me to pay ~900 USD. Is there something that I do not know?
You'll need to sign in or create an account to connect with an expert.
The $900 tax is probably right. The $20,000 gain is added to your other income to determine your tax bracket. That is, all you income is considered in arriving at whether your are over the $40,000 (actually $44,625 for 2023) limit for 0% capital gains. So, yes, some of that $20,000 will only be taxed at 0%, but not all of it.
TurboTax uses the IRS "Qualified Dividends & Capital Gains" worksheet* to calculate the tax on Long term capital gains, capital gains distributions and Qualified dividends. On that worksheet, the qualified income will be totaled and the total allocated to the 0% and 15% rates, as needed.
*In some cases a "Schedule D worksheet" will be used instead.
The $900 tax is probably right. The $20,000 gain is added to your other income to determine your tax bracket. That is, all you income is considered in arriving at whether your are over the $40,000 (actually $44,625 for 2023) limit for 0% capital gains. So, yes, some of that $20,000 will only be taxed at 0%, but not all of it.
TurboTax uses the IRS "Qualified Dividends & Capital Gains" worksheet* to calculate the tax on Long term capital gains, capital gains distributions and Qualified dividends. On that worksheet, the qualified income will be totaled and the total allocated to the 0% and 15% rates, as needed.
*In some cases a "Schedule D worksheet" will be used instead.
Still have questions?
Make a postAsk questions and learn more about your taxes and finances.
jarvfam01
Level 1
mjudychavez
Level 1
mxu1
Level 1
lasr
Level 2
Brian Todd
Level 1
Did the information on this page answer your question?
You have clicked a link to a site outside of the TurboTax Community. By clicking "Continue", you will leave the Community and be taken to that site instead.