Tax Questions: 1. Cap Gains 2. Tax Rate
I'm doing my taxes now to help decide how much IRA to convert to Roth. Two Questions:
1. My understanding is that capital gains are taxed at a different rate from ordinary income. Then why is it that I'm seeing the capital gains (1040 line 13) simply added together with wages to get the total income?
2. Currently my taxable income for 2007 comes to $3,474. I'd expect, then, that my tax would be 10% of this, or $347. However, Taxact calculates it as $174, which corresponds to a tax rate of 5%. What am I misunderstanding?