Why are my long-term capital gains being taxed when my total earned income is less than $40,000? Seems like a glitch in Turbotax software!

Forum|Forum|4 years ago
March 15, 2022
4 replies
0 views

I've done my research. My taxable income is less than $40,000, which means that my capital gains should fall into the 0% tax category. And yet, Turbotax is trying to take thousands of dollars from me. What's the glitch? Is there some way I can fix it before I go pay a different company to prepare my taxes?

TurboTax Premier Online

Bsch4477

Employee

Did your capital gain when added to your other income put you in a higher tax bracket?

jessikaobAuthor

No, when added to my other income I'm still at less than $40,000.

VolvoGirl

Employee

Check out the capital gain tax worksheet.

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.

pqm5

The same thing happened to me. My taxable income was around $17,000 and I had $425 in capital gains, which was included in the calculation of my taxes for last year. I just discovered that capital gains are subject to a 0% tax rate when taxable income is less than $40,000, and every year capital gains have been included as income. So, under these circumstances, I would not consider it to be a glitch in the software. I think it may be time to look at other tax software.

fanfare

Employee

prepare with other software and if you get better results you can amend.

That probably won't happen.

There are tax outfits on internet that will do your current and/or past year return over for you for no charge.

@pqm5

SandySocks

Ok, so IRS says no capital gains tax if wages plus dividends and interest are under $44,000. Everyone complaining about TurboTax clitch that adds the capital gains as income even though the person is earning under $44K. But NO ONE has answered how to fix this!!!!! I may have to stop using TurboTax if it can't even follow IRS rules. Does anyone know exactly what you input on the exact form for 2023 federal tax to get this right?

Called Turbo Tax and they wanted me to pay and extra $ to get a tax advisor!!ridiculous!