Capital Gains - I have taxable income, but owe no tax?

Forum|Forum|2 years ago
February 20, 2024
1 reply
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Form 1040 line 15 (taxable income) has value of $3,806 - Turbo lists Tax as 0 on line 16.

I have a Taxable Income of $3,806 but owe no tax. How is that possible?

Do I even need to file with IRS?

Thanks

TurboTax Home & Biz Windows

Best answer by DawnC

Net capital gains are taxed at different rates depending on overall taxable income, although some or all net capital gain may be taxed at 0%. For taxable years beginning in 2023, the tax rate on most net capital gain is no higher than 15% for most individuals. A capital gains rate of 0% applies if your taxable income is less than or equal to:

$44,625 for single and married filing separately;
$89,250 for married filing jointly and qualifying surviving spouse; and
$59,750 for head of household.

Did you check out the Tax Smart Worksheet on your Form 1040 worksheet? That will show how the $0 was determined. It is between Line 15 and 16 on your Form 1040 worksheet.

DawnC

Employee

Is your taxable income all from long-term gains? If you held on to your stock for more than one year, it’ll be taxed at the long-term capital gains tax rates of 0%, 15% or 20%, depending on your income. Look at your Form 1040/1040SR Wks - worksheet, under Line 15, Tax Smart Worksheet, what line is the X on? That is where you can see how the $0 was determined.

Do I need to file a federal tax return? You probably do need to file, but check this chart and the list of situations that require filing. The numbers are gross income, not taxable income.

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Don222Author

I had capital loss on my return, but I still don't understand how a taxable income has no taxes.

My standard deduction of $15,700 is less than my total income (line 9).

I trust TurboTax but I would like to understand why no taxes when tax tables indicate I would owe taxes.

thanks

DawnCAnswer

Employee

$44,625 for single and married filing separately;
$89,250 for married filing jointly and qualifying surviving spouse; and
$59,750 for head of household.

Did you check out the Tax Smart Worksheet on your Form 1040 worksheet? That will show how the $0 was determined. It is between Line 15 and 16 on your Form 1040 worksheet.

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"