Should't my tax bill be the same with or with out a LT capital gain of 4147 if my total taxable income is 84,591? Turbo tax is saying I need to pay hundreds more?

[scott167]

I'm expecting to pay no tax on the LT capital gain given the line 15 total taxable income is below $94,050 am I wrong?

[Vanessa A]

Are you  married filing jointly?  Is that your combined income is less than $94,050?  If you are single or filing separately your income needs to be below $47,024.  If you are married filing jointly, then your combined total income needs to be less than $94,050.

If it is, be sure that you entered it as a long term gain. Go back and double check your dates. 

[scott167]

Yes I’m MFJ and my income on line15 is less than 90k. To test my theory I set the cost basis for the stock equal to the sale price and my return increased by a few hundred dollars .  It is a long term gain around 4K when the cost basis is correct. What else can i check? I fear my tax is being computed incorrectly.

[KrisD15]

There are some amounts that need to be added to the amount on your 1040 line 15 such as qualified dividends on line 3a. 

Please see the Schedule D Tax Worksheet listed under line 21 in the Schedule D instructions. 

[scott167]

Thanks. From studying the work sheets. It looks like the LT capital gain increase my total income which increased the percentage of social security income that was taxed. So even though my MFJ income was less than 94k I still ended up paying more for the long term capital gains. Does that seem right?

[Vanessa A]

Yes, this seems right.  Capital gains tax is based on your taxable income.  Since all of the capital gains is taxable income (even if it is at a 0%), it could increase your social security taxable amount from 50 to 85% taxable pushing you up into the next level for your taxable income.  

If you fall into the following, 85% of your social security is taxable income

• Single with income above $34,000
• Married Filing Jointly with income above $44,000
• Married Filing Separate regardless of income

If you fall into the following, 50% of your social security is taxable income

• Single with combined income between $25,000-$34,000
• Married Filing Jointly with combined income between $32,000 and $44,000

Your combined income is calculated by adding your

• AGI plus
• Nontaxable Interest plus
• 1/2 of your social security Benefits

Social Security Benefits Taxes