I played with Turbo Tax for a while fudging numbers, but seemed to get somewhat inconsistent results (most likely my fault) so I decided to simply ask my question here.
This is more out of curiosity than actual need, but here is the question.
When estimating my taxes (single person) I have the impression that I can stack up the various types of income in the following order.
First, I can take the standard deduction as a negative number.
Second I can add in wages, interest, dividends and short term capital gain This would be at my earned income tax rate, which would be 10% on some 12% on most and maybe 22% on some.
Third I can add in long term capital gain, which would be either 0% or 15% depending.
I get the following scenarios:
No category 2 income. I should be able to have $40,400 LTCG plus $12,550 standard deduction for $52,950 and pay 0% taxes.
Category 2 income $12,550, LTCG $40,400, same thing 0% taxes.
Category 2 income $22,500, LTCG $40,400, I would pay 10% on the extra $9950 of category 2 income, 0% on the 30,450 of LTCG under $40,400 total income and 15% on the rest of the LTCG.
That is, the category 2 earned income comes first and would push the LTCG back with some in the 0% and some going into the 15% range?
Is this how it works?
Thanks.
This is more out of curiosity than actual need, but here is the question.
When estimating my taxes (single person) I have the impression that I can stack up the various types of income in the following order.
First, I can take the standard deduction as a negative number.
Second I can add in wages, interest, dividends and short term capital gain This would be at my earned income tax rate, which would be 10% on some 12% on most and maybe 22% on some.
Third I can add in long term capital gain, which would be either 0% or 15% depending.
I get the following scenarios:
No category 2 income. I should be able to have $40,400 LTCG plus $12,550 standard deduction for $52,950 and pay 0% taxes.
Category 2 income $12,550, LTCG $40,400, same thing 0% taxes.
Category 2 income $22,500, LTCG $40,400, I would pay 10% on the extra $9950 of category 2 income, 0% on the 30,450 of LTCG under $40,400 total income and 15% on the rest of the LTCG.
That is, the category 2 earned income comes first and would push the LTCG back with some in the 0% and some going into the 15% range?
Is this how it works?
Thanks.
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