Capital Gains and Losses

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I received a stock buyout in 2016 which I held for almost 6…

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I received a stock buyout...
I received a stock buyout in 2016 which I held for almost 6 years. When I put that into my Turbo Tax program it seems that it was just added to normal income and taxed at more than 15%. Is this supposed to be taxed at 15% and not count towards income?
Submitted: 4 months ago.Category: Capital Gains and Losses
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3/7/2018
Tax Expert: Chad EA, CDFA®, CFP®, CERTIFIED FINANCIAL PLANNER ®, Professional replied 4 months ago
Chad EA, CDFA®, CFP®
Chad EA, CDFA®, CFP®, CERTIFIED FINANCIAL PLANNER ®, Professional
Category: Capital Gains and Losses
Satisfied Customers: 2,636
Experience: IRS Licensed Enrolled Agent, CDFA ® CFP ®, MBA
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Tax Expert: Chad EA, CDFA®, CFP®, CERTIFIED FINANCIAL PLANNER ®, Professional replied 4 months ago

Capital gains is added to your income on line 13 of the 1040.

Generally capital gains are taxed at 15%.

The capital gains tax rates are 0%, 15,% and 20%

Please let me know if this has answered your question or if you have any additional questions.

When you have no further questions a positive rating of 5 stars is much appreciated.

Thank you!

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Customer reply replied 4 months ago
I guess that is why I am confused.If I made $70,000 in W2 income I would be taxed at 15%.
If I add $23,000 in stock to my 1040 that shows my income at $93,000. Which means that up to ~$76,000 is $15 but $17,000 is taxed at ~$25%. (Sorry the % are not accurate)However, my assumption is that my $70,000 income is taxed at $15% and the $23,000 in LT CG stock is taxed at %15 as well.But in the first case I end up paying more tax meaning I really did not pay 15% on the LT CG stock.Please help clarify.
Tax Expert: Chad EA, CDFA®, CFP®, CERTIFIED FINANCIAL PLANNER ®, Professional replied 4 months ago

If our Adjusted gross income is over $37,950 your top federal tax bracket for ordinary income is 25% and your long term capital gains rate is 15%, if you are married filing jointly your income does not start beign taxed at 25% until you reach the income of $75,900

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Tax Expert: Chad EA, CDFA®, CFP®, CERTIFIED FINANCIAL PLANNER ®, Professional replied 4 months ago

Here is a link to Schedule D which is used to complete your long term capital gains calculations

https://www.irs.gov/pub/irs-pdf/f1040sd.pdf

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Tax Expert: Chad EA, CDFA®, CFP®, CERTIFIED FINANCIAL PLANNER ®, Professional replied 4 months ago

If you go to line 20

Are lines 18 and 19 both zero or blank?

Yes. Complete the Qualified Dividends and Capital Gain Tax Worksheet in the instructions for Form 1040, line 44 (or in the instructions for Form 1040NR, line 42). Don't complete lines 21 and 22 below

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Customer reply replied 4 months ago
I'm still confused.Let's say we made $100,000. Now add $25,000 is LT CG stock sell. On the forms it look like we are taxed 25% since the $25,000 pushed out income to $125,000. To it seem that we would pay $11,385 in tax ($75,900 x .15) + $6,025 ($24,100 * .25) = $17,410. Then the LT CG would be $3,750 ($25,000 * .15). So my total tax bill would be $21,160.However, it seems that it works like this: $11,385 in tax ($75,900 x .15) + $12,275 ($49,100 * .25) = $23,660 in tax.So my question is the $21,160 or $23,660 correct?Running the forms I ended up with $23,660.
Customer reply replied 4 months ago
Both 18 and 19 are blank.
Tax Expert: Chad EA, CDFA®, CFP®, CERTIFIED FINANCIAL PLANNER ®, Professional replied 4 months ago

You would have to run the numbers through the capital gains worksheet which I have attached

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