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In 2012 the tax rate for long term capital gains should be 0% for filers who are in the 10% or 15% tax bracket. I just ran a scenario through TurboTax 2012, and my long term capital gain are shown as taxable income. I checked the individual forms, but I do not see any place on the 1040 or supporting forms to "adjust" the long term capital gains income so they are taxed at 0% (I'm in the 15% tax bracket. ) What am I missing here? There has to be an "adjustment" somewhere.


Expert Charles Markham's Answer:

The capital gains is not adjusted.  Your AGI doesn't change.  The favorable tax treatment (if there is any) occurs on the tax calculation which is the back of schedule D.  Instead of looking up your taxes in the tables, you compute your taxes using capital gains rates.


Charles Markham

Markham & Company LLC

Charles Markham, EA


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