Zoey wrote:OK...I get it.
When I filled out the Qualified Dividends and Capital Gain Tax Worksheet-Line 44, the qualifed dividends that I have on line 9b actually reduced my taxable income and thus my taxes were less...right?
On line 13, if I had a capital loss would I just put a minus figure on that line and than subtract it from the total of lines 7-21.
I know that was probably a really stupid question, but this will be the first time I have had to fill out these things. In the past, it was always a no brainer 1040EZ. Searching doesn't necessarily answer obvious questions. Thanks for bearing with me.
Q1.....close but not quite.....your taxable income (line 43 if using 1040) stays the same but on the worksheet, for the purposes of computing tax, some subtotal got reduced when you subtracted out the qualified dividends/capital gains. Edit to add:
the qualified dividends/capital gains got taxed at some lower rate (perhaps even 0% under certain conditions).
Q2....if you have a capital loss you need to enter it on Sch D first, along with any other capital gains/losses to see if your loss may be limited to 3K. Then you would carry the appropriate result from Sch D to line 13 of the 1040 and
follow the instructions for line 22..... "add" all the numbers together........just make sure you remember your algebra when adding +/- numbers together.
Doing taxes by hand is a great way to understand what you are doing. Sounds like progress.