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1) We have an approximate net $38,000 capital gain from an…

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1) We have an...

1) We have an approximate net $38,000 capital gain from an inherited home that we sold in 2107. Our tax preparer says we have to pay a 15% capital gains tax AND then the $38,000 has to be added to our ordinary income which pushes us into a 28% tax bracket & we have to pay income taxes on the same $38,000. That's 43% taxes on the same money! This does not seem right! (2) We paid an Alternate Minimum Tax on our 2016 return of $2,000+. Adding this $38,000 to our ordinary income (along with a $22,000 RMD we received for the first time), we are now being told that the Alternate Minimum Tax is over $6,000.

Accountant's Assistant: The Accountant will know how to help. Is there anything else the Accountant should be aware of?

Only that we reside in California.

Submitted: 2 months ago.Category: Tax
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Answered in 10 minutes by:
3/18/2018
Tax Professional: Carter McBride, Certified Public Accountant (CPA) replied 2 months ago
Carter McBride
Carter McBride, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 1,147
Experience: Adjunct Professor
Verified

Hey! I'm Carter, I'm a CPA and can help you out.

That's totally wrong. You pay capital gains tax on your capital gains. The capital gain income is not part of your ordinary tax calculation.

But honestly, your preparer would be using tax software the automatically calculates that. Whatever the software is saying is the tax due is probably correct and your tax guy is just describing it incorrectly.

The AMT issue, cap gains is just taxed at the 20% rate and again, I'm guessing his tax software is probably preparing it and he's not explaining it properly.

Let me know if you need anything else. IF not, please leave a rating. Thanks!

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Tax Professional: Carter McBride, Certified Public Accountant (CPA) replied 2 months ago

Hey! Just wanted to follow up to see if you needed anything else. If not, please leave a rating so I can get credit for helping you out. Thanks!

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Carter McBride
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