topic My long term capital gains get pulled directly from line 16 on schedule D to line 7 on my 1040. Doesn't this make the gains get taxed at my marginal income tax rate? in Investors & landlords

My long term capital gains get pulled directly from line 16 on schedule D to line 7 on my 1040. Doesn't this make the gains get taxed at my marginal income tax rate?

devang-r-amin — Fri, 05 Mar 2021 20:34:48 GMT

I was under the impression that long term capital gains tax would be charged at 15% in my tax bracket.

Re: My long term capital gains get pulled directly from line 16 on schedule D to line 7 on my 1040. Doesn't this make the gains get taxed at my marginal income tax rate?

Mike9241 — Fri, 05 Mar 2021 21:13:27 GMT

there will be a qualified dividend and long-term capital gain worksheet in your return where the tax is calculated.

Re: My long term capital gains get pulled directly from line 16 on schedule D to line 7 on my 1040. Doesn't this make the gains get taxed at my marginal income tax rate?

VolvoGirl — Fri, 05 Mar 2021 21:15:10 GMT

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 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.

You can probably tell because the tax on 1040 will be less than the Tax Table

https://ttlc.intuit.com/community/forms/help/form-1040-line-11-amount-is-less-than-standard-irs-tax-table/00/25752

Re: My long term capital gains get pulled directly from line 16 on schedule D to line 7 on my 104...

MarilynG1 — Fri, 05 Mar 2021 21:21:00 GMT

Is your tax bracket the same after adding the Long Term Capital Gains? The LT capital gains are added to your other taxable income to determine the tax bracket you are in for determining what capital gains tax rate to use.

One major exception to a reduced long-term capital gains rate applies to collectible assets, such as antiques, fine art, coins, etc. which are taxed at 28%.

Another is Net Investment Income Tax (NIIT), which adds a 3.8% surtax to certain net investments of individuals.

Click this link for more info on Capital Gains Tax Rates.

Re: My long term capital gains get pulled directly from line 16 on schedule D to line 7 on my 1040. Doesn't this make the gains get taxed at my marginal income tax rate?

devang-r-amin — Fri, 05 Mar 2021 21:23:09 GMT

Makes perfect sense now, thank you! The total tax lines up perfectly with normal income tax rates on income prior to capital gains plus 15% on the capital gains.