Understanding Long-Term Capital Gains Tax

[jean_sim3000]

Hello,

I am trying to understand the process of long-term capital gains tax (I want to contribute in my IRA to reach the 0% tax bracket for long-term capital gain).

Right now my taxable income is 95k (married filing jointly) and I have $8000 worth of long-term capital gain.

Currently, I should pay $1200 worth of long-term capital gains tax ($8000 @ 15%) within my total tax owed amount, which is around $8000.

For testing purposes, I reduce some income (bank interest) by $1000. My taxable income drops below 94k, which is under the threshold for tax free long-term capital gains.

However, my tax owed amount has only dropped by $400. Why ? If I don't pay tax on any long-term capital gains, I should save at least $1200.

Can someone explain this to me please? Is TurboTax incorrectly estimating my tax ?

Thank you.

[JamesG1]

We cannot see your tax return.

The capital gains calculation is likely made on the Schedule D Tax Worksheet or the Qualified Dividends and Capital Gain Tax Worksheet.

Print or view your tax return to see how the calculation is changing as you make changes to the tax return.

In TurboTax Online, you may print or view your full tax returns prior to filing after you have paid for the software.

• View the entries down the left side of the screen at Tax Tools.
• Select Print Center.
• Select Print, save or preview this year's return.

In TurboTax Desktop, select FORMS in the upper right hand corner of the screen.