Why, in TurboTax, are my long-term capital gains being reported as normal taxable income?

[whlife]

I have a long-term gain of $2,220. In the forms, this is added as standard taxable income. From IRS information, the tax on long-term capital gains for me should be 0%. Why is TurboTax figuring this wrong?

[MinhT1 · Accepted solution]

In TurboTax, your long term capital gain is included in your taxable income to conform to the IRS rules and tax forms. However, tax on your long term capital gain is correctly calculated at the reduced rate.

[Anonymous]

there will be a form to compute the taxes on LTCG and qualified dividends.  it will be labeled something like "Qualified Dividends and Capital Gains Worksheet"

[whlife]

So, I did my taxes on TurboTax online. When I entered the information on capital gains, I expect TurboTax to complete the taxes correctly. It did no calculations, only entered the gains.

What I see, if I want it entered correctly on my tax forms, I have to do it myself and not use TurboTax. Is that what we are saying?

[DoninGA]

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@whlife wrote:

So, I did my taxes on TurboTax online. When I entered the information on capital gains, I expect TurboTax to complete the taxes correctly. It did no calculations, only entered the gains.

What I see, if I want it entered correctly on my tax forms, I have to do it myself and not use TurboTax. Is that what we are saying?

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What do you mean "did no calculation"?  Did you have taxable income reported on your federal tax return Form 1040 on Line 11b?  If so, what were the Taxes entered on Line 12a?

[VolvoGirl]

Even though it shows up as income on the first page,  if you have capital gains or qualified dividends the tax on line 12a is not taken from the tax table but is calculated separately from schedule D.  The tax will be calculated on the Qualified Dividends and Capital Gain Tax Worksheet.  It does not get filed with your return.  In the online version you need to save your return as a pdf file and include all worksheets to see it.

For the Desktop version you can switch to Forms Mode and open the worksheet to see it.  Click Forms in the upper right (upper left for Mac) and look through the list and open the Qualified Dividends and Capital Gain Tax Worksheet.

[whlife]

Thank you. When we downloaded the completed tax documents, the capital gains worksheet is not included. So, there is no way to know TurboTax calculated the proper taxes. In the future, the worksheet should be included. 

We went on IRS.gov, found the worksheet, and manually calculated. That's when we realized TurboTax was correct.

[DoninGA]

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@whlife wrote:

Thank you. When we downloaded the completed tax documents, the capital gains worksheet is not included. So, there is no way to know TurboTax calculated the proper taxes. In the future, the worksheet should be included. 

We went on IRS.gov, found the worksheet, and manually calculated. That's when we realized TurboTax was correct.

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For the 2019 tax return you have to use Print Center and then the option for all forms and worksheets.

To access your current or prior year online tax returns sign onto the TurboTax website with the userID you used to create the account - https://myturbotax.intuit.com/

When you sign onto your online account and land on the Tax Home web page, scroll down and click on Add a state. 

This will take you back to the 2019 online tax return.

Click on Tax Tools on the left side of the online program screen.  Then click on Print Center.  Then click on Print, save or preview this year's return.  Choose the option Include government and TurboTax worksheets

[shaw1881]

The amount of my refund went down by about 10% of the captial gain, even though our taxable income is well below $80800 (for 2021). I understand that the LTGC has to be included with the income in order to calculate the taxable income to determine if the 80,800 threshold has been passed or not, but the software is actually computing the tax including the LTCG. What gives?

[Critter-3]

Did you review the form 8949 and Sch D to make sure the sale was entered as long term and did you review the QDCGT worksheet ?  

Click on Tax Tools on the left side of the online program screen.  Then click on Print Center.  Then click on Print, save or preview this year's return.  Choose the option Include government and TurboTax worksheets.

[Hal_Al]

Review the "Qualified Dividends and Capital Gains Tax worksheet" (abbreviated "Qual Div/Cap Gn" on the forms list) for the actual calculations. Look at line 9 and 18, in particular (tax on LTCG)

[VolvoGirl]

Even if it's not taxed it still increased your income and AGI and could reduce some credits and itemized deductions like medical.

[Hal_Al]

Or make more of your social security taxable. 

[ESBinMD]

When using TurboTax, how do I ensure that my capital gains are taxed at 0% if I do cross the relevant threshold?

[Hal_Al]

Q.  When using TurboTax, how do I ensure that my capital gains are taxed at 0% if I do cross the relevant threshold?

A.  Review the "Qualified Dividends and Capital Gains Tax worksheet" (abbreviated "Qual Div/Cap Gn" on the forms list) for the actual calculations. Look at line 9 (the amount taxed at 0%) and line18 (the amount taxed at 15%), in particular.