topic No Tax on Capital gains is in the 10 - 15% tax bracket. Income is showing the capital gains and is being taxed. in Investors & landlords

No Tax on Capital gains is in the 10 - 15% tax bracket. Income is showing the capital gains and is being taxed.

lingcod1234- — Thu, 06 Jun 2019 15:08:42 GMT

No Tax on Capital gains is in the 10 - 15% tax bracket. The problem is Capital Gains is showing in the income section and is being taxed. It should show as zero in income, or at least should not be taxed.

Example

Income:

$5800 working

$11700 Unemployment

$7000 Conversion to Roth from a 403b

$2000 Dividends

$3800 Capital Gains

Total income that should be taxed is should be $26,500

The probable is that the capital gains should be $0.0 in the income, but it is not. The whole $3800 is being taxed.

I'm using the Deluxe Turbo Tax

Married filing Join

Is this right or is there a problem with Turbo tax?

Even though the full amount shows up as income on the fir...

VolvoGirl — Thu, 06 Jun 2019 15:08:44 GMT

Even though the full amount shows up as income on the first page of the 1040 or 1040A, if you have capital gains or qualified dividends the tax on line 44 (or 28) 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.

https://ttlc.intuit.com/questions/1899683-form-1040-line-44-amount-is-less-than-standard-irs-tax-table

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.

Thanks VolvoGirl, on 1040 it still should as income. To t...

lingcod1234- — Thu, 06 Jun 2019 15:08:46 GMT

Thanks VolvoGirl, on 1040 it still should as income. To test out, I changed the amount of capital gains to $10,000 and my tax payment increased.
Please advise

Well of course it does. It is still income. And more ca...

VolvoGirl — Thu, 06 Jun 2019 15:08:48 GMT

Well of course it does. It is still income. And more capital gains will increase your overall income even if it is taxed at a lower rate. 10% on 1,000 is $100
10% on 10,000 is $1,000

You are right, at that income, a long-term capital gain s...

TaxGuyBill — Thu, 06 Jun 2019 15:08:50 GMT

You are right, at that income, a long-term capital gain should not increase your Federal taxes.

Did you enter it as a LONG-term Capital Gain?

Have you looked at the 1040 to check that the only those items of income are showing up, and are the correct amounts? And you have no other income (even non-taxable income) that you entered on the tax return?

One other thought ... was the Capital Gain on stock, or w...

TaxGuyBill — Thu, 06 Jun 2019 15:08:51 GMT

One other thought ... was the Capital Gain on stock, or was it on something else? If it was something else, what did you sell?

Yes I did long-term capital gains. And what I sold was s...

lingcod1234- — Thu, 06 Jun 2019 15:08:53 GMT

Yes I did long-term capital gains. And what I sold was stocks that I’ve had for over 20 years.

My total income including capital gains is $30,000. I added another $10,000 on the capital gains just to see what it would do, and my tax payment went up for federal taxes

At that income level the tax on long term capital gains a...

DJS — Thu, 06 Jun 2019 15:08:55 GMT

At that income level the tax on long term capital gains and qualified dividends should be zero. Short term capital gains would however be taxed at 15%. Is that what's happening in your case?

No, we put it in the long term gains. That’s why were thi...

lingcod1234- — Thu, 06 Jun 2019 15:08:57 GMT

No, we put it in the long term gains. That’s why were thinking there’s a glitch in the TurboTax. This is the 2016 TurboTax Deluxe version. Does this matter?

Did you check the "Qualified Dividends and Capital Gains...

TomD8 — Thu, 06 Jun 2019 15:08:58 GMT

Did you check the "Qualified Dividends and Capital Gains Tax Worksheet" in TurboTax to make sure your capital gains are indeed being taxed?

Yes

lingcod1234- — Thu, 06 Jun 2019 15:09:00 GMT

Yes

We've never seen that kind of error in the TTX 2016 deskt...

SteamTrain — Thu, 06 Jun 2019 15:09:02 GMT

We've never seen that kind of error in the TTX 2016 desktop software, not if fully updated.
Try this, since we seem to be dancing around without being able to spot exactly where things are going wrong.

List what $$ amount you have on your 2016 form 1040 for lines (without adding the test 10,000 CapGn):
7
9b
13
15b
16b
22
37
43

Maybe that will point to an area to look at

I don't think anyone mentioned this but adding more incom...

VolvoGirl — Thu, 06 Jun 2019 15:09:04 GMT

I don't think anyone mentioned this but adding more income will increase your AGI and can affect your schedule A Itemized Deductions and affect or reduce any credits you qualified for like EIC, or increase a health penalty. Many other lines can change. More investment income can disqualify you from some credits.

Good answer by Turbo Tax Anita on adding new long term taxable income……..
When you enter one taxable transaction, you can't just watch the monitor. You increased your overall adjusted gross income and with that come many other changes in your return, not just the incremental tax on the one transaction.

....true...other credits may be reduced or disallowed sim...

SteamTrain — Thu, 06 Jun 2019 15:09:06 GMT

....true...other credits may be reduced or disallowed simply because the AGI has increased....even Healthcare premium tax credits.

Look at your Form 1040, Lines 40, and 44-62. Which lines...

TaxGuyBill — Thu, 06 Jun 2019 15:09:07 GMT

Look at your Form 1040, Lines 40, and 44-62. Which lines change when you change the amount of Capital Gain?

Hello line number 41 changed, 43changed. 46changed. 47cha...

lingcod1234- — Thu, 06 Jun 2019 15:09:09 GMT

Hello line number
41 changed,
43changed.
46changed.
47changed.
56 changed.
All changed when I changed the capital gains

Thanks Please advise

Duplicate

lingcod1234- — Thu, 06 Jun 2019 15:09:11 GMT

Duplicate

lingcod1234- — Thu, 06 Jun 2019 15:09:12 GMT

Duplicate

lingcod1234- — Thu, 06 Jun 2019 15:09:14 GMT

Duplicate

removed

SteamTrain — Thu, 06 Jun 2019 15:09:16 GMT

removed