1099-Div increase my Taxes substantially

[mehranariani]

When I enter these numbers in my 1099-div my taxes liability goes up by $6,953, that almost 32% of total capital gains

Box 1a - Total ordinary dividends $11,479.69
Box 1b - Qualified dividends Learn more $2,153.59
Box 2a - Total capital gain distr. $21,339.51

Thank you for any feedback

[AmyC]

The capital gains income is added to your income to determine which capital gains tax rate applies, but the highest is 28%. We can't see your forms to know what other changes happened. You may have lost some other credits when calculating your tax differently. You can save and compare your forms before and after entry, looking for tax credit changes as well. Some credits, like EIC would be eliminated with that passive income level.

Reference: Topic No. 409 Capital Gains and Losses - IRS

[baldietax]

if you're just looking at the Fed due $ tracker on desktop that can also include other affects of adding more income, you need to consider the effect on your overall 1040 by adding income and look at that line by line... deductions or credits may get phased out, other income may get taxed differently, and that tracker also includes any penalty that may be due if you haven''t finished inputting estimated taxes etc or miscalculated and owe a penalty.  Also remember the 3.8% net investment income tax above certain levels.

[Mike9241]

we can't see your return so review thw capital gain and qualified dividend worksheet.

its possible

if your capital gains and qualified dividends were taxed at 20% that would be about $3500

the nonqualified dividends could be tax at 37% about another $3500

other possibilities

1) your income might be high enough to subject you to the Net Investment Income Tax of 3.8%

2) does that $7,000 included state income taxes

3) higher income can reduce or eliminate certain deductions and credits

we have no access to your return to give you a more precise answer as to what's happening. What you could do is to review your return both before and after these numbers are entered to see what's happening. 

[mehranariani]

I compared overall numbers with and without 1099-DIV , the taxable income jumps by $32K. Nothing else changed on the return between the two 

No 1099-DIV

Gross Income $ 309,414.00
Taxable Income $ 267,169.00
Total Tax $ 51,283.00
Total Payments/Credits $ 41,110.00
Payment Due $ 10,173.00
Effective Tax Rate 16.23%

1099-DIV
Adjusted Gross Income $ 342,234.00
Taxable Income $ 299,989.00
Total Tax $ 58,236.00
Total Payments/Credits $ 41,110.00
Payment Due $ 17,126.00
Effective Tax Rate 16.35%

[baldietax]

it's hard to nail down without your filing status and other info how the income is made up (long term cap gains etc) but rough thoughts...

1) 23493.1 (Box 1b+2a) taxed at long term cap gain rates likely hitting 15% = $3523

2) 9325.1 (Box 1a - 1b) taxed at ordinary income rates not sure you filing status and bracket but if single it could be as much as 35% = $3264.

(see Qualified Dividends and Capital Gain Tax Worksheet for the calcs/tax table amounts for 1+2).

3) you're saying nothing else changed on 1040 but do you mean before Line 15; is there effect on tax reported by Schedule 2 / Form 8960 / 1040 Line 23 due to NIIT?  This would 3.8% for some amount, possibly not all of the amount from this 1099 depending on threshold but Form 8960 would be adding in Box 1a + 2a (32819) with your other investment income in the threshold/calcs.

1+2 at least get to $6787 you had $6953 effect so it's a reasonable tax amount from what I can see, but depends on your return details but hopefully this helps point you in the direction of what to look for to tie it out.