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Why does TurboTax program Step - by- Step say tax on Capital Gains is $0 but it gets added as income on Line 7 of Form 1040?

 
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Why does TurboTax program Step - by- Step say tax on Capital Gains is $0 but it gets added as income on Line 7 of Form 1040?

Even though the full amount shows up in the total income on the 1040 line 7, if you have capital gains or qualified dividends the tax 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 the 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.


IRS Qualified Dividends and Capital Gain Tax Worksheet—Line 16 on 1040 instructions page 36
https://www.irs.gov/pub/irs-pdf/i1040gi.pdf

 

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