Long term capital gains tax incorrectly calculated at 20%

[goutham-s-nandan]

My Tax due was 585 after W2 import.
It became 11830 after adding only 1099-B.
10,660 taxes on (Long Term 58214.31 + Short term 871.93)

I expected (58214.31 *0.15) + (871.93 *0.24) additional tax. (24% for Annual Taxable Income  of 325k)

8732 + 209 = 8941
So I expected 8941 tax, but it is showing 10660.

To get to 10451 on long term tax, it would be 10451/58214.31 (18%)

So, it seems like 18% is being applied instead of 15% for long term capital gains.

I have not added any deductions. I am just using standard deductions for married filing jointly. I really think this is a bug with TurboTax.

The taxes calculated on 59k income from  "Stocks, Cryptocurrency, Mutual Funds, Bonds, Other" shows about 12k. For married filing jointly, the tax should 15% for $80,801 to $501,600. I am within this  limit. Could anyone explain why its calculating 18%? Thank You!

[Rick19744]

It's hard for someone to diagnose the issue, since we can't see your input,  but I recommend you print preview your return and look at your Schedule D worksheet.

Here you will see the details of how TT is computing your capital gains tax.

[goutham-s-nandan]

Actually, its pretty straight forward. I added W2 income of 265k. It said some $500 due. The  I added securities sale. I had 55 sales for a total gain of 60k. in That 1k was short term. So 59k was long term. When I add it, the tax due goes from around 500 to 12500. So it effectively calculated 20% tax on the 59k returns. I was expecting it to calculate, 15% and make it 9500. It seems like its applying 20% bracket for capital gains tax instead of 15%.

[SteamTrain]

Something else to check..

Check for a Form 8960....the additional $$ may be from the additional Net Investment Tax....that extra tax also shows up on line 12 of the Schedule 2....also line 23 of the form 1040 (though some other added taxes can add into line 23)

[goutham-s-nandan]

Thanks, after import from Robinhood, it added 3 forms. There is some 4k income from dividends. I deleted everything but 1099-B and my W2.  It seems like just the 59k from 1099-B seems to be adding 20% of 59k as taxes. I think it could be a bug with the website where all capital gains is getting taxed at 20%.

[SweetieJean]

Keep in mind that any increase in income can also lower or eliminate some deductions/credits.

[goutham-s-nandan]

Tax was 585 after W2.
It became 11830 after adding only 1099-B.
10,660 taxes on (Long Term 58214.31 + Short term 871.93)

I expected (58214.31 *0.15) + (871.93 *0.24) additional tax.
8732 + 209 = 8941
So I expected 8941 tax, but it is showing 10660.

To get to 10451 on long term tax, it would be 10451/58214.31 (18%)

So, it seems like 18% is being applied instead of 15% for long term capital gains.

I have not added any deductions. I am just using standard deductions for married filing jointly. I really think this is a bug with TurboTax.

[Rick19744 · Accepted solution]

I don't believe there is a bug.

@SteamTrain hit the nail on the head.

Quick and dirty:

• $59,000 CG x 15% = $8,850
• Income 265,000+59,000+4,000= $328,000
• $328,000 - 250,000 = 78,000 x 3.8% = $2,964 (this is your net investment income tax)
• CG $8,850 + NIT $2,964 = $11,814.  This is approximately the amount you were referring to in your original post
• Obviously there are some adjustments, rounding, etc. to the income that I don't have, but I believe once you factor those in you should see the result is correct.
• I believe all is good as 15% + 3.8% = 18.8% figure which is where you are coming out.

[goutham-s-nandan]

@Rick19744 Thank you so much for the explanation. I now understand it. I was not aware that there was the 3.8% NII or Medicare tax on capital gains. And thanks @SteamTrain for the information. 

[Rick19744]

@goutham-s-nandan you are welcome.