topic Calculated Taxes in Get your taxes done using TurboTax

Calculated Taxes

RJM77 — Wed, 10 Mar 2021 23:11:23 GMT

Using Turbotax Premier my taxable income was $76,215, but the system shows taxes to be ZERO. This can't be correct. What is wrong?

Re: Calculated Taxes

KrisD15 — Wed, 10 Mar 2021 23:50:36 GMT

What did you have withheld?

Look for credits.

Look at your 1040.

Taxable income is line 15

Tax liability is line 16

Deductions and credits follow subtracting from the tax due

Is your stimulus on line 30?

Click Tax Home

Click Review if necessary to get Tax Tools on the left side-bar

Click Tax Tools on the left side-bar (you may need to use the scroll bar for the left side-bar to see this)

Click Tools on the drop-down list

Click View Tax Summary on the Tools Center screen

When you do this, Preview my 1040 appears on the left side-bar

Click Preview my 1040 on the left side-bar

Re: Calculated Taxes

RJM77 — Mon, 15 Mar 2021 20:04:16 GMT

No, your response was not helpful.

My Taxable Income from Form 1040, line 15 is $76,520. My Qualified Dividends (Line 3a) is $22,588 and the smaller of line 15 or 16 of Schedule D is $58,132. Using these figures and the fact that I am married and filing jointly, how did Turbotax using the "Qualified Dividends and Capital Gain Tax Worksheet" determine my tax on all taxable income to be ZERO ($0)? I believe Turbotax has an issue with this tax worksheet.

I look forward to hearing from you,

RJM77

Re: Calculated Taxes

DawnC — Mon, 15 Mar 2021 20:30:19 GMT

Generally, capital gains are taxed according to how long you've held a particular asset – known as the holding period. Profits you make from selling assets you’ve held for a year or less are called short-term capital gains. Alternatively, gains from assets you’ve held for longer than a year are known as long-term capital gains. Typically, there are specific rules and different tax rates applied to short-term and long-term capital gains. In general, you will pay less in taxes on long-term capital gains than you will on short-term capital gains.

Line 16 of Form 1040 will tell you what forms and tables were used to calculate the tax on your taxable income (Line 15). If most of that income was long-term capital gains and you are filing a joint return, the first 80K of those long-term gains are taxed at zero percent (0%).

2020 Long-Term Capital Gains Tax Rates This guide has both short-term and long-term capital gains rates for 2020.

As previously mentioned, different tax rates apply to short-term and long-term gains. However, if your investments end up losing money rather than generating gains, those losses can affect your taxes as well. However, in this case, you can use those losses to reduce your taxes. The IRS allows you to match up your gains and losses for any given year to determine your net capital gain or loss.

If after fully reducing your gains with your losses and you end up with a net loss, you can use up to $3,000 of it per year to reduce your other taxable income.