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W2 + Capital gains taxes

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?

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3 Replies

W2 + Capital gains taxes

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.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**

W2 + Capital gains taxes

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!

 

ThomasM125
Expert Alumni

W2 + Capital gains taxes

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%.

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