topic capital gains long term shows up taxed as normal income in Investors & landlords

capital gains long term shows up taxed as normal income

Steve661 — Sun, 21 Mar 2021 16:29:30 GMT

1040 shows 105K and line 7 8200 capital gain added to tax liability base. The 8200 should be identified as LT Cap gain and taxed 0%. Why does turbotax Premier add this into our normal income tax rate?

Re: capital gains long term shows up taxed as normal income

ColeenD3 — Sun, 21 Mar 2021 16:41:20 GMT

Go back and check your entries. You may have accidentally put the wrong box, or maybe there is an error in downloading them.

Re: capital gains long term shows up taxed as normal income

Hal_Al — Sun, 21 Mar 2021 18:11:54 GMT

TurboTax has done it correctly. The LTCG goes on line 7 of form 1040 and becomes part of your AGI on line 11 and taxable income on line 15. The application of the 0% tax rate is shown on the "Qualified dividends and capital gains work sheet" (sometimes the "Schedule D worksheet"). In particular, see line 9 on the worksheet.

https://www.thetaxbook.com/updates/TheTaxBook/Client%20Tax%20Tools/2020_Qualified_Dividends_and_Capital_Gain_Tax_Worksheet.pdf