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Level 2

My 2018 tax filing shows both LTCG and STCG being added to the 1040 line 6. It seems both are treated as regular income. How does LTCG get the lower tax rate then?

 
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Level 20

My 2018 tax filing shows both LTCG and STCG being added to the 1040 line 6. It seems both are treated as regular income. How does LTCG get the lower tax rate then?

The capital gains flow into the Form 1040 from the new Schedule 1 (and possibly a Schedule D before that), and they will show as part of total income and adjusted gross income, which is likely what you are seeing on the Form 1040, Lines 6 and 7.  However, the actual tax calculation occurs on the "Qualified Dividends and Capital Gain Tax Worksheet".  On that worksheet is where the LTCG get the favorable tax treatment.

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Level 20

My 2018 tax filing shows both LTCG and STCG being added to the 1040 line 6. It seems both are treated as regular income. How does LTCG get the lower tax rate then?

The tax will be calculated on the Qualified Dividends and Capital Gain Tax Worksheet.  It does not get filed with your return.  In the online version you need to save your return as a pdf file and include all worksheets to see it.

 

For the Desktop version you can switch to Forms Mode and open the worksheet to see it.  Click Forms in the upper right (upper left for Mac) and look through the list and open the Qualified Dividends and Capital Gain Tax Worksheet.

 

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Level 20

My 2018 tax filing shows both LTCG and STCG being added to the 1040 line 6. It seems both are treated as regular income. How does LTCG get the lower tax rate then?

The capital gains flow into the Form 1040 from the new Schedule 1 (and possibly a Schedule D before that), and they will show as part of total income and adjusted gross income, which is likely what you are seeing on the Form 1040, Lines 6 and 7.  However, the actual tax calculation occurs on the "Qualified Dividends and Capital Gain Tax Worksheet".  On that worksheet is where the LTCG get the favorable tax treatment.