Refund not changing when adding stock sale

Forum|Forum|4 years ago
October 21, 2021
5 replies
35 views

I may be premature in asking this, as I have not dug very deep... although in starting this thread I think I am realizing why my refund is not changing... maybe.

I am taking a 2020 return for my mom and editing it, creating a scenario showing a stock sale with a gross sale amount, initially around $10K, and indicating that she did not pay any federal taxes on the sale. Yet, for some reason, after entering the sale and completing that section, it doesn't affect my refund at all! I would have thought that it would subtract the taxes due on the stock sale at whatever rate it determines based on current income, etc.

BUT... now I'm realizing that it's possible she may pay no taxes if her income as a single filer is less than $40,000. Does that sound like it could be the reason there is no change in the refund amount? Although, withdrawals from annuities + SS does exceed $40K a year, but I'm not sure what is counted as 'income' for the purpose of capital gains taxes.

Is that enough for someone to make sense out of this? LOL

GeorgeDenseff

Level 8

The first $40,000 in capital gains is taxed at 0% rate for single tax payers in 2020.

LonestarAuthor

Level 5

Ahhhh, OK so the 'ordinary' or other income up the that point is basically irrelevant and the $40K income figure I'm reading about, above which the tax rate goes to 10%, is just related only to the capital gains income? (I hope I worded that correctly.)