I have made approximately 20,000 USD by selling some stock I have. Since I sold it after owning it for over a year, I thought I would not get taxed at all (tax bracket indicates that capital gain tax of 0% will be applied for profit under 40,000 USD). However, Turbotax is asking me to pay ~900 USD. Is there something that I do not know?
The $900 tax is probably right. The $20,000 gain is added to your other income to determine your tax bracket. That is, all you income is considered in arriving at whether your are over the $40,000 (actually $44,625 for 2023) limit for 0% capital gains. So, yes, some of that $20,000 will only be taxed at 0%, but not all of it.
TurboTax uses the IRS "Qualified Dividends & Capital Gains" worksheet* to calculate the tax on Long term capital gains, capital gains distributions and Qualified dividends. On that worksheet, the qualified income will be totaled and the total allocated to the 0% and 15% rates, as needed.
*In some cases a "Schedule D worksheet" will be used instead.
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