Question

Capital Gains Entry

Forum|Forum|4 years ago
March 30, 2022
4 replies
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I have capital gains from mutual funds in block 2a of a 1099-DIV downloaded by TurboTax from a brokerage. TurboTax entered them directly onto line 7 of form 1040. My research indicates these type capital gains are considered long term and, based on my AGI, should be taxed at 15%. With the entire amount of the capital gains entered on line 7 of the 1040 it seems they are considered income and are being taxed at a higher rate. Is there a way to enter the capital gains so they are taxed at 15%? When I manually adjust my income and compute taxes owed to reflect the 15% tax on capital gains it saves me more than $1000.

Also, when I view the "Your 2021 Income Summary" page in TurboTax 2021 Premier software, the value of the capital gains is not displayed anywhere. Yet it shows on line 7 of the 1040.

T

ThomasM125

The capital gain distributions must be reported on line 7. However, they are taxed based on the source of the entry, at 15% typically. When you print out your tax return, you will have a Qualified Dividends and Capital Gain Tax Worksheet that will show you how the capital gains are taxed. You should see the capital gain distributions listed on line 17 and the 15% tax on line 18.

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VolvoGirl

Employee

See the IRS worksheet on 1040 page 36 for how the tax is figured. Turbo Tax uses the same worksheet.

https://www.irs.gov/pub/irs-pdf/i1040gi.pdf

If you have capital gains or qualified dividends the tax is not taken from the tax table but is calculated separately from schedule D. The tax will be calculated on the Qualified Dividends and Capital Gain Tax Worksheet. It does not get filed with your return.

In the online version you need to save your return as a pdf file and include all worksheets to see it.

For the Desktop version you can switch to Forms Mode and open the worksheet to see it. Click Forms in the upper right (upper left for Mac) and look through the list and open the Qualified Dividends and Capital Gain Tax Worksheet.

M

Mike9241

capital gains can push other income into a higher breacket.

D

DaveB4Author

Thanks to all for responding.

Not sure what happened in my case:

- TurboTax did not use/prepare a schedule D (I'm working with the windows desktop program, TurboTax Premier - went to file/print/selected "forms to keep for your records/Tax Return, all calculation worksheets")

- There are no entries on line 17 form 1040; line 18 is the same as line 16

Is it possible there was an error/glitch in the download from the brokerage? Should I go back and try entering the data manually?

Again, I appreciate any help/advice.