I did my W2 tax calculations separately. Then I did my Capital Gains taxes separately. When I then enter both W2 and Capital Gains together, why are my taxes almost 50% more than close to the sum of the separate tax determinations?
You'll need to sign in or create an account to connect with an expert.
If you entered only your W-2, your standard deduction was used with only that income. If you entered only the capital gains, your standard deduction was used with that. When you entered all of the combined taxable income, your tax increased. More income = more tax. A similar effect would occur if you entered W-2's, one by one and only looked at them in isolation.
Thank you for the response! I did *not* think about the standard deduction at all ...
A few more questions if you please:
1. Seems to me that the capital gains increased my tax bracket. Is that true? 'cos just the standard deduction being used once against the combined income should not lead to my taxes jumping by 50%.
2. Is it also true that the capital gains tax rate is dependent on my overall income?
Thank you for your support!
Yes, the capital gains tax rate is $0 for single filers with adjusted gross income of $47,205 ($94,050 joint filers) or less and increases to 15% when income is over those amounts up to incomes of $291,850/$583,750, above which it increases to 20%.
Still have questions?
Questions are answered within a few hours on average.
Post a Question*Must create login to post
Ask questions and learn more about your taxes and finances.
Lburns31
New Member
Vidyaprakash54
New Member
Lburns31
New Member
s d l
Level 2
fcp3
Level 3