My mutual fund reported $6.6K of Total Capital Gains in Box 2a of there 1099-DIV. TurboTax has placed that exact amount in Box 6 of my Form1040 and I'm being taxed on it. But shouldn't it be 0% tax because my taxable income (filed as Married Jointly) is only $64K, this is well under the $78,750 trigger point when CG gets taxed. Why am I being taxed on the Capital Gains as ordinary income?
Yes, you are correct your long-term capital gains will taxed at 0% in your income bracket. The capital gains will be included in your taxable income but the Qualified Dividends and Capital Gain Tax Worksheet is used to calculate the tax. When you look at the worksheet you will see that the long-term capital gain was taxed at 0%.
In the preview of Form 1040 you can verify how your tax was calculated:
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