Mutual Fund Capital Gains treatment

[rjabara]

My mutual funds in my taxable account distributed capital gains in December.  When I look at Turbotax, it appears to put this on line 8 of the 1040 and therefore seems to treat as ordinary income.  I am certain that this should be LT capital gains and taxed at the Capital Gains rates instead of Ordinary Income.  Could you explain how Turbotax deals with this?  I have looked through the entire tax return and only see it added to income thus creating a larger tax liability on that income.  Any ideas?

[Bsch4477]

Yes, the gains are added to income but the tax calculation will tax that portion of your income at the capital gains rate to arrive at your overall tax liability. 

[Mike9241]

line 8 would be wrong. it should be line 7 which is capital gains if you have only capital gain dividends the schedule D not required box is checked.  if you also have security sales capital gain dividends should flow to line 13 of schedule D 

if they're appearing on line 8 you made an incorrect entry somewhere because they should be reported on 1099-DIV line 2a