Question

Federal income tax is not being computed on AIG of 70K why?

Forum|Forum|5 years ago
February 2, 2021
1 reply
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It does compute the se tax.

If you have a large amount of capital gain, this could explain why you owe no tax other than SE tax.

First, understand that tax isn't computed based on AGI.

Once AGI is calculated, standard or itemized deductions are subtracted, and then the qualified business income deduction, if present, to arrive at taxable income.

Your tentative tax is based on taxable income, and some or all net capital gain might be taxed at 0% if your taxable income is less than $80,000. See IRS Topic No. 409 Capital Gains and Losses for more information.