Turbotax is incorrectly charging me for capital gains when I should be exempt

[lucychou122]

Hi, I am doing a 2024 tax return. I've been using Turbotax for years, so I think I'm a pretty experienced user.

My taxable income is $27, 922 (1040 line 15). I checked this on the forms as I switch back between forms and EasyStep. This is correct.

My capital gains (1040 line 7 is $3139), and this is long term gains. I checked the schedule D.

The clip level for 0% capital gains tax is $47,025, so my understanding is that I should not be getting taxed on the $3139 capital gains.

However, I am getting taxes on the capital gains.  I tested this by added a fake line of $1000 in capital gains, and the tax went up. 

Why is this happening? Am I misunderstanding something? or did I enter something incorrectly?

Thank you.

[lucychou122 · Accepted solution]

I'm very disappointed. I feel this is a software issue or problem with the software not being user friendly. 

I called Intuit and they said I needed to pay $60 to have someone look into it.

I'm hoping there is some help I can get on this forum. In the meantime, I will use the free government websites to see if calculations are correct there.  

[JohnB5677]

Yes, we can work through this.

• I did this in TurboTax Desktop and it does work.
• Are you in the Online version?

Please respond with @JohnB5677 so I get your response.

[lucychou122]

@JohnB5677 Hi John, thanks so much. Yes, I am using Desktop Turbotax.

[JohnB5677]

I've worked you numbers, and had a second person try them and it worked correctly.  

• However, Id like to evaluate the way you prepared the return.
• contact @JohnB5677 with a token number.

You can share your return with a specialist.

The return will be "sanitized", meaning all names, social security numbers and personal references are removed.

We will then be able to determine the source of the issue.

In TurboTax CD/Download versions, 

1. Go to the black panel on your screen and select Online.
2. Scroll down and select Send tax file to Agent.
3. You will see a message explaining what the diagnostic copy is. Click send through this screen, and you will get a Token number.
4. Provide the Token Number (including the dash) that was generated in the response.

[lucychou122]

hi @JohnB5677

The token number is:  4697113937435135-14201601

[lucychou122]

Hi , I think I figured this out.  I believe Turbotax is doing this correctly.

The reason why the tax goes up when capital gains is higher, is because the capital gains causes  AGI to increase and causes more of SS to be taxable. 

I don't think you need to look at this anymore, but I appreciate the help. Thank you @JohnB5677.

[DawnC · Accepted solution]

Yes, the capital gains are taxable income even though they are taxed at 0%.   More taxable income can increase the amount of taxable social security income (Line 6b).   

[JohnB5677]

If you go into the forms mode you can find the:

• Qualified Dividend and Capital Gain Tax Worksheet.

This is the typical IRS Sudoku puzzle of a form, but it does prove that you WERE NOT taxed on the capital gains.

This was a good exercise!  Thank you.

@lucychou122