I know it is 15% but for the life of me, I can't figure out how the calculations are done by the software. As far as I can see, the capital gains, dividends, distributions etc are all added to the income to come up with AGI. Once the calculations go in to AMT, I lose the trail of it altogether. I see no calculations of the type "multiply line yy by .15" on the Schedule D.
My question:- Which line does the capital gains split out of AGI again? Otherwise as far as I can see, I am getting taxed at my marginal tax rate on the capital gains. The only two subtractions that I see on my 1040 entries are for itemized (or standard) deduction and exemptions. That's it. I hope I am wrong!
I know what IRS publication says but please show me using 1040 and Schedule D as to how it actually accomplishes that.
Am I going senile in my old age or what???
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Capital gains and deductible capital losses are reported on Form 1040, Schedule D (PDF), Capital Gains and Losses, and on Form 8949 (PDF), Sales and Other Dispositions of Capital Assets. If you have a net capital gain, that gain may be taxed at a lower tax rate than your ordinary income tax rates. The term "net capital gain" means the amount by which your net long-term capital gain for the year is more than your net short-term capital loss for the year. The term "net long-term capital gain" means long-term capital gains reduced by long-term capital losses including any unused long-term capital loss carried over from previous years. Generally, for most taxpayers, net capital gain is taxed at rates no higher than 15%. Some or all net capital gain may be taxed at 0% if you are in the 10% or 15% ordinary income tax brackets. However, beginning in 2013, a new 20% rate on net capital gain applies to the extent that a taxpayer’s taxable income exceeds the thresholds set for the new 39.6% ordinary tax rate ($400,000 for single; $450,000 for married filing jointly or qualifying widow(er); $425,000 for head of household, and $225,000 for married filing separately). For more information, refer to Publication 505, Tax Withholding and Estimated Tax.
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My question:- Which line does the capital gains split out of AGI again? Otherwise as far as I can see, I am getting taxed at my marginal tax rate on the capital gains. The only two subtractions that I see on my 1040 entries are for itemized (or standard) deduction and exemptions. That's it. I hope I am wrong!
I know what IRS publication says but please show me using 1040 and Schedule D as to how it actually accomplishes that.
Am I going senile in my old age or what???
============================================================
Capital gains and deductible capital losses are reported on Form 1040, Schedule D (PDF), Capital Gains and Losses, and on Form 8949 (PDF), Sales and Other Dispositions of Capital Assets. If you have a net capital gain, that gain may be taxed at a lower tax rate than your ordinary income tax rates. The term "net capital gain" means the amount by which your net long-term capital gain for the year is more than your net short-term capital loss for the year. The term "net long-term capital gain" means long-term capital gains reduced by long-term capital losses including any unused long-term capital loss carried over from previous years. Generally, for most taxpayers, net capital gain is taxed at rates no higher than 15%. Some or all net capital gain may be taxed at 0% if you are in the 10% or 15% ordinary income tax brackets. However, beginning in 2013, a new 20% rate on net capital gain applies to the extent that a taxpayer’s taxable income exceeds the thresholds set for the new 39.6% ordinary tax rate ($400,000 for single; $450,000 for married filing jointly or qualifying widow(er); $425,000 for head of household, and $225,000 for married filing separately). For more information, refer to Publication 505, Tax Withholding and Estimated Tax.
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