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Help requested with taxes
Old 02-21-2009, 01:46 PM   #1
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Help requested with taxes

OK, I'm sure I'm just doing something simple wrong here, but I've gone over the worksheet several times and can't figure it out. Help!

2008 federal taxes, trying to calculate form 1040 line 44.

Filling out the Qualified Dividends and Capital Gain Tax Worksheet on page 38 of the form 1040 instructions as directed by schedule D line 22 and the form 1040 instructions, page 37.

Form 1040 line 43 is $20,976
Form 1040 line 9b is $170.09
Filing status single
STCL on Schedule D of $3,770 (reduced to $3,000 on line 21 of schedule D)

So I'm walking through the worksheet on page 38 and get:

1. $20,976
2. $170.09
3. Yes. Line 16 is a loss -> $0
4. $170.09
5. $0
6. $170.09
7. $20,805.91
8. $20,976
9. No. $20805.91
10. $170.09
11. Yes. Goto line 15
15. $2,723
16.

OK, I'm at line 16 and it tells me to add lines 14 and 15. But I didn't fill in line 14 because of the instructions on line 11.

If I assume zero, and continue, then line 18 will end up being $2,723, which would imply that the qualified capital gains would be taxed at 0%.

Wait, is that it? In this case is the person's income so low that their capital gains are taxed at 0%? Weird, but nice.

Any help appreciated.

2Cor521
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Old 02-21-2009, 01:54 PM   #2
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I had a similar surprise when I did my taxes last week. Had a capital gain of about $14,000 (had redeemed all shares of a mutual fund account in Jan. 08, that I had held for many years). Expected that I would be paying a couple grand or so in cap. gains taxes on that, but was pleasantly surprised to find that I owed nothing. Turns out that the 0% cap. gains tax rate applies, if your taxable income is below $65,100. Nice, huh?
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Old 02-21-2009, 02:11 PM   #3
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Very nice...I only wish I would have been able to take more advantage of it.

Thanks...

2Cor521
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Old 02-21-2009, 03:32 PM   #4
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Originally Posted by SecondCor521 View Post
Very nice...I only wish I would have been able to take more advantage of it.

Thanks...

2Cor521
This is a perfect example of what "gets me" about the tax code.

I'd assume that the reason that code was put in there was to try to change behaviors somehow - right? Yet, the code is so complex, and the tax softare isn't out until the tax year is over, so people cannot really take advantage of this stuff as intended. It just sort of "happens", all after the fact.

Wassup w'dat?

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