I am in 0% rate because my married filing jointly taxable income is $68,000. Why are my capital gains included in my taxable income?

[DavidD66]

You are correct, the long term capital gains rate for Married Filing Joint taxpayers is 0%, up to a taxable income of $80,800.  Can you clarify something - taxable income of $68,000 is that including your capital gain, or exclusive of your capital gains?  Are any of your capital gains short term?

[abbyrother]

My taxable income includes all of my long term capital gains. Per my Schedule D, I do not have any short term capital gains. I have checked my past two year returns, and the capital gains are always included in my taxable income on my 1040. How do I know if they were indeed taxed?

[rjs]

The fact that the long-term capital gains are included in the "taxable income" on Form 1040 line 15 does not mean that you are actually paying tax on the gains. (Technically the gains are taxable, but they are taxed at a 0% tax rate.) The tax calculation takes the 0% rate into account. To see how the tax is calculated you have to look at the worksheet where the calculation is done. Depending on what is in your tax return, the tax is probably calculated on the Qualified Dividends and Capital Gain Tax Worksheet, or possibly the Schedule D Tax Worksheet.