I sold stock this past year, and had capital gains of $183,740. This sale was considered long-term, and when I put the number into Turbo Tax the effective tax owed came out to $34,544, which I calculated at 18.8%. Based on my income and the capital gains I profited from the sale, I assumed I would pay a 15% capital gains tax. Is that not the case?
"Is that not the case?"
Not at that level of income.
Do you print and review your tax return before submitting it? You should.
There is a net investment income tax surcharge of 3.8% on some or all of that gain.
Any increase in income can also lower or eliminate some deductions/credits.
Are you receiving Social Security benefits? More of them may have become taxable.
Also see this re the Net Investment Income Tax:
Net Investment Income Tax | Internal Revenue Service (irs.gov)
Dang. The net investment income tax is the difference, I was unaware of that. Bummer. Thanks for letting me know, that makes sense (the +3.8% on top of the assumed 15% for a total of 18.8%).
when investment income exceeds a certain level there's an additional 3.8% medicare tax look for form 8960
I've a total adjustable income is 168k, which include long term capital 16k, and i thought the first 40k capital gain is 0% tax rate, however with turbo tax with or without this 16k the tax diff is $2,384. Can any one share their thought? Thanks
@dcskim That 0% long term capital gains rate is based on your total income. If your total income is below $40,400 then your long term capital gains rate is 0%. Between $40,400 and $445,850 it's 15%. $16K times 15% is $2400. TurboTax is calculating correctly.