Tax rates on capital gains?

[Mrdavaca]

Can someone explain if I' am correct. Here is my example I have 150K of income for the tax year 2021. All of this income was realized through the sale of stocks and dividends received. Deduction is single standard.

55k of this income is from long term capital gains. 95k is from short term capital gains. Would my taxes be 15% on the longterm gains in excess of 40k and the 95k taxed as ordinary income on a tiered level? 

please if anyone can help explain this to me.

[DianeW777]

Yes.  The capital gains rate is a maximum rate based on your taxable income. In your scenario you are taxed at 15% on your long term capital gains since your overall taxable income is below $445,850.

The tax rate on most net capital gain is no higher than 15% for most individuals. Some or all net capital gain may be taxed at 0% if your taxable income is less than or equal to $40,400 for single.

• A capital gain rate of 15% applies if your taxable income is more than $40,400 but less than or equal to $445,850 for single

[Mrdavaca]

So if I have Short term and Long term capital gains  as my only income for the year can you explain how the taxes would be calculated.. I believe there is a mistake in the software.

[RaifH]

You would use the tax determined by the Qualified Dividends and Capital Gains worksheet to determine your tax. Because your non-long-term capital gains exceed the $40,400 cut-off for the 0% tax rate, your entire long-term capital gains and qualified dividends are taxed at 15%. Your short-term gains and regular dividends minus the standard deduction will be taxed at the ordinary tax rate. 

[Hal_Al]

Q. Would my taxes be 15% on the longterm gains in excess of 40k and the 95k taxed as ordinary income on a tiered level? 

A. No.  The entire $55K LT gain will  be taxed at 15%.  This is because your ordinary income, including ST gains is taxed first (goes into the first $40,525 of taxable income).  Another way to look at it is: the LT gain goes on top of ordinary income. 

As others stated, the calculation is shown on the "Qualified dividends and capital gains worksheet"  (sometimes the "Schedule D worksheet" is generated instead). 

[Mike9241]

Turbotax completes a qualified dividend and capital gain worksheet where your tax is calculated.