My husband and I have taxable income of <40K. When I enter $1500 in Capital gains from sale of stock, our refund goes from >3K to owing $500. Why is this?

[MichaelL1]

Are these short term capital gains?

versus long term (held more than one year.

Can you double check this entry as a $3,500 swing for reporting $1,500 something else is going on.  Make sure the sales price and the cost basis, do not have extra decimal places or commas.

[Critter]

This would negate any EIC you may have been getting.

[steph0405]

Thank you for your answer. They are long term. I have tried entering (and removing) them 3 times. I have also tried uploading directly from my financial institution and I get the same result every time.

[steph0405]

Critter#2 why would it cancel out the EIC?

[MichaelL1]

Can you do a preview of your tax return and tell me what is on line !7 without the capital gain and after it is entered.

To Preview a copy of the Form 1040 prior to paying for TurboTax.
A. Go to Tools in left side of screen and click on Tools
B. A box titled: Tool Center will open and below the 3 boxes is: Other helpful Links…
C. Click on the first one: View Tax Summary
D. Then in left side of screen click on: Preview My 1040
E. You can scroll up and down and see the numbers on a working copy of your Form 1040

[steph0405]

Ok, I will do this.

[MichaelL1]

Investment income includes interest, dividends, and capital gains. It also includes royalties and passive activities from Schedule E, though most taxpayers don't have to deal with those.  

If this exceeds $3,500 in 2018 the the EITC is gone.   This is what Critter#2 is referring to.

[MichaelL1]

Have not heard from you for awhile.  Did you find the issue or still need help?

[steph0405]

I haven't been able to comment.

[steph0405]

My account was on hold for a while for some reason. It turns out I have more than $3500 investment income, so it wipes out the EITC. Which is such a bummer. Thanks for your help.

[MichaelL1]

Thank you and I will put that in the answer so others know this is closed.

[MichaelL1 · Accepted solution]

Investment income includes interest, dividends, and capital gains. It also includes royalties and passive activities from Schedule E, though most taxpayers don't have to deal with those.  

If this exceeds $3,500 in 2018 then the EITC is gone.