Well, no. The LTCG and dividends are included in the taxable income, but the rate for them depends on your tax bracket.Sorry, Ray, but I've gotta pull rank on you on this one. I'm a tax professional and I KNOW how this works. Play with it in TurboTax (for 2012). Enter $10,000 of dividends and other income to get taxable income of $70,699 (married-joint). Then add $2 more income to bump the T.I to $70,701. The tax jumps a whole lot, because the entire $10K of dividends is now taxed. If so, there's something wrong with Turbo Tax. Given your numbers, the tax itself should go up by 15 cents on one dollar and 25 cents on the second dollar. If you have any Social Security income, the additional income would also come into play in determining how much of the Social security income is included in taxable income. Worst case would have an additional $2 * 85% or $1.70 added to taxable income, which would increase the tax by another 43 cents. So all up, the tax would go up by 15+25+43 or 83 cents on that extra $2 of income.Tell you what, I'll check on my tax program tomorrow when I'm at work, and I'll let you know the correct tax amounts. And if you've still got your copy of Turbo Tax hanging around, I invite you to do the same. (Because I really doubt Turbo Tax would get this wrong.)--Peter
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