What this line means
Your total tax on income including capital gains, as calculated on either the Qualified Dividends and Capital Gain Tax Worksheet (line 20) or the Schedule D Tax Worksheet (line 21). This amount flows to Form 1040, line 16 as your tax. This line exists to consolidate the result from whichever worksheet you used.
Does this apply to you?
- Everyone who completes Part III (Summary) of Schedule D with a net gain
- This is the final output of the Schedule D tax calculation
- The amount transfers directly to Form 1040
Easy to overlook
This number replaces the standard tax table, it does not add to it The tax calculated here is your total income tax, not an additional tax on top of the tax from the tax tables. When you use the Qualified Dividends worksheet or Schedule D Tax Worksheet, you skip the tax table entirely. Some filers mistakenly add the worksheet result to the tax table result, doubling their reported tax. 1 General filing pattern — Schedule D tax flows to Form 1040
A zero on this line does not mean you have no tax If Schedule D shows a net loss and you do not have qualified dividends, you use the regular tax table instead and leave this line blank. Your tax still gets computed — just not through Schedule D’s worksheets. The tax table result goes directly to Form 1040 line 16. 2 IRS Schedule D instructions — Line 22
Watch out for this
Adding the Schedule D worksheet tax to the regular tax table amount on Form 1040 line 16. The worksheet calculates your full income tax already — it accounts for your ordinary income and your capital gains in one calculation. Entering both the worksheet result and a tax table result on Form 1040 doubles your reported tax liability.
Footnotes
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IRS Schedule D (Form 1040) Instructions. See also IRS Publication 17, Your Federal Income Tax. https://www.irs.gov/pub/irs-pdf/p17.pdf ↩
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IRS Schedule D (Form 1040) Instructions, Line 22. https://www.irs.gov/instructions/i1040sd ↩