Need help calculating long term capital gains tax on my 1040 for investment sale
So I'm trying to figure out how to calculate my long term capital gains tax on my 1040 for the first time. I sold some stocks I had for about 6 years and made around $17,500 on them. My regular income is about $68,000 as a project manager. I'm using TurboTax but honestly I'm confused about which tax bracket my capital gains fall into since it's separate from my regular income. I know there are 0%, 15%, and 20% brackets for long term capital gains but I'm not sure how to determine which one applies to me. Do I add my regular income and capital gains together to figure out the bracket? Or are they completely separate calculations? Also, is there some kind of worksheet I need to fill out for the 1040 to calculate this properly? I thought TurboTax would make this easy but I'm getting confused about some of the questions they're asking about cost basis and holding periods. Any help would be super appreciated!
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Oscar O'Neil
The long term capital gains tax rate depends on your total taxable income, which includes both your regular income and your capital gains. For 2024 taxes (filed in 2025), the long term capital gains brackets are: 0% rate: If your total taxable income is $47,025 or less for single filers ($94,050 or less for married filing jointly) 15% rate: If your total taxable income is between $47,026 and $518,900 for single filers ($94,051 to $583,750 for married filing jointly) 20% rate: If your total taxable income exceeds those upper thresholds With your $68,000 regular income plus $17,500 in capital gains, your total of $85,500 would put you in the 15% capital gains bracket (assuming you're filing as single). TurboTax should handle this calculation automatically once you enter your income and capital gains information correctly. For the cost basis questions, you just need to enter what you originally paid for the stocks (including any commissions). The holding period is just confirming you owned them for more than a year, which you did at 6 years.
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Sara Hellquiem
•Thanks for the explanation! I'm still a bit confused though - does that mean my entire capital gain amount gets taxed at 15%? Or is it like regular income tax where different portions get taxed at different rates? Also, do I need to fill out Schedule D?
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Oscar O'Neil
•Your entire long-term capital gain amount would be taxed at 15% in your situation. Unlike regular income tax which uses a progressive system, capital gains tax applies the single rate to the entire gain amount once you determine which bracket you fall into. Yes, you'll need Schedule D (Capital Gains and Losses) to report your stock sale. TurboTax will generate this form automatically when you enter your capital gains information. The software will also complete Form 8949 if needed, which lists your individual transactions before they're summarized on Schedule D.
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Charlee Coleman
After struggling with capital gains calculations for years, I finally found something that helped me tremendously. I was in almost the exact same situation with some stocks I sold after holding for 7 years. I kept getting confused about the tax implications and whether I was calculating everything right. I discovered https://taxr.ai which saved me hours of frustration. You can upload your tax documents and investment statements, and it analyzes everything to show exactly how your capital gains should be calculated. It even explains which tax forms you need and why. The system flagged a mistake I was about to make with my cost basis calculation that would have cost me nearly $900.
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Liv Park
•How accurate is this tool compared to something like TurboTax? I'm dealing with multiple stock sales from different years and trying to figure out my capital gains is giving me a headache.
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Leeann Blackstein
•Does it work for more complicated situations? I have some inherited stocks where I'm not sure about the stepped-up basis rules, plus some employee stock options. Would it handle all that?
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Charlee Coleman
•The accuracy is extremely high - it uses the same tax calculations as professional software but presents everything in plain English. It handles all the same calculations as TurboTax but explains things better, especially for capital gains. I compared the results with what my accountant did last year and they matched perfectly. Yes, it actually specializes in more complicated situations like yours. It has specific modules for inherited stocks with stepped-up basis calculations and employee stock options with their special tax treatment. You just upload your documents and it identifies the different types of assets and applies the right rules to each.
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Leeann Blackstein
Just wanted to follow up about taxr.ai that was mentioned earlier. I was skeptical but decided to try it since my capital gains situation was getting complicated with those inherited stocks and employee options. It was honestly a game-changer! The system immediately identified my inherited shares and walked me through the stepped-up basis rules with actual dollar calculations. What really impressed me was how it spotted a mistake in my brokerage statement where the cost basis was reported incorrectly for some of my oldest shares. Would have completely missed that on my own. Ended up saving about $1,200 in taxes I would have overpaid! Definitely worth checking out if you're dealing with any kind of capital gains calculation.
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Ryder Greene
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Carmella Fromis
•How does this actually work? I thought it was impossible to get through to the IRS without waiting for hours. Is this some kind of premium service you pay for?
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Theodore Nelson
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Theodore Nelson
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AaliyahAli
One thing that tripped me up with long term capital gains last year was the Net Investment Income Tax. If your modified adjusted gross income exceeds $200,000 (single) or $250,000 (married filing jointly), you might owe an additional 3.8% tax on your investment income. Doesn't sound like you're in that range from what you described, but something to be aware of as your income grows. TurboTax should calculate this automatically if it applies to you.
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Ellie Simpson
•Do capital losses offset the Net Investment Income Tax as well? I had some gains but also some pretty big losses this year.
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AaliyahAli
•Yes, capital losses do offset gains before calculating the Net Investment Income Tax. The NIIT applies to your "net" investment income, so losses are factored in before determining if this additional tax applies. If your losses exceed your gains, you can use up to $3,000 of the excess to offset your ordinary income, and any remaining losses can be carried forward to future tax years. This can be a helpful strategy if you're near the NIIT threshold.
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Arjun Kurti
Don't forget to check if your state taxes capital gains too! I got hit with a surprise when I found out my state taxes capital gains at the same rate as regular income (which was higher than the federal capital gains rate). TurboTax should handle this, but worth double-checking the state section.
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Raúl Mora
•That's a really good point. Does anyone know which states don't tax capital gains? I'm thinking about moving soon and this could be a factor.
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Arjun Kurti
•That's right! Tax-free states include Florida, Texas, Washington, Nevada, Alaska, Wyoming, South Dakota, New Hampshire, and Tennessee. There are also states with special treatment for capital gains like Arizona and Montana that offer partial exclusions in some cases. But watch out for other taxes these states might have instead - some have higher property taxes or sales taxes to make up for the lack of income tax. Total tax burden is what really matters for your bottom line.
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