- My Forums
- Tiger Rant
- LSU Recruiting
- SEC Rant
- Saints Talk
- Pelicans Talk
- More Sports Board
- Fantasy Sports
- Golf Board
- Soccer Board
- O-T Lounge
- Tech Board
- Home/Garden Board
- Outdoor Board
- Health/Fitness Board
- Movie/TV Board
- Book Board
- Music Board
- Political Talk
- Money Talk
- Fark Board
- Gaming Board
- Travel Board
- Food/Drink Board
- Ticket Exchange
- TD Help Board
Customize My Forums- View All Forums
- Show Left Links
- Topic Sort Options
- Trending Topics
- Recent Topics
- Active Topics
Started By
Message
Question about reporting capital gains on Form 1040
Posted on 1/3/24 at 11:08 pm
Posted on 1/3/24 at 11:08 pm
If, as is the case, specific income tax rates apply to long-term capital gains, why are such gains just "lumped in" with the other types of income listed on Form 1040, at line 7? Stated another way, if the tax rate applicable to the capital gains is distinct from the rate applicable to the other types of income (such as wages), how does that distinct rate get applied to the capital gains in the Form 1040 calculation?
Thank you -- and, to no one's surprise, I'm not a CPA.
Thank you -- and, to no one's surprise, I'm not a CPA.
3
Posted on 1/4/24 at 1:34 am to Zachary
quote:
If, as is the case, specific income tax rates apply to long-term capital gains, why are such gains just "lumped in" with the other types of income listed on Form 1040, at line 7? Stated another way, if the tax rate applicable to the capital gains is distinct from the rate applicable to the other types of income (such as wages), how does that distinct rate get applied to the capital gains in the Form 1040 calculation?
Posted on 1/4/24 at 8:06 am to LSURussian
Hopefully our accounting wizards will chime in with nuggets of wisdom that answers the question.
Posted on 1/4/24 at 8:33 am to Zachary
ChatGPT: While long-term capital gains have specific tax rates, they are initially reported on Form 1040, line 7, where all types of income are aggregated. After that, the distinct tax rate for capital gains is applied during the calculation of your total tax liability. This is typically done on Schedule D and then factored into the overall tax computation. It ensures that long-term capital gains are taxed at their specific rates rather than being subject to the regular income tax rates.
This post was edited on 1/4/24 at 8:34 am
Posted on 1/4/24 at 10:30 am to Zachary
The answer lies in the Schedule D Tax Worksheet.
LINK
It is the last two pages of the linked document.
You fill that out to apply the qualified tax rates and also calculate your tax on ordinary income.
Thankfully, tax software will fill this out for you. It is NOT filed... you just use this to figure out the tax and then fill in the tax amount.
And this type of income is on Page 1 because it's part of your Adjusted Gross Income which is used for a number of calcluations.
LINK
It is the last two pages of the linked document.
You fill that out to apply the qualified tax rates and also calculate your tax on ordinary income.
Thankfully, tax software will fill this out for you. It is NOT filed... you just use this to figure out the tax and then fill in the tax amount.
And this type of income is on Page 1 because it's part of your Adjusted Gross Income which is used for a number of calcluations.
Page 1 of 1
Popular
Back to top
Follow TigerDroppings for LSU Football News