IRS notice

[Jane63]

I filed my taxes using Turbo Tax. I just received a notice saying I owe more taxes. The noticed stated that 1040 line 15   taxable Income was the same for Turbo Tax and the IRS. Turbo calculated the taxes owed at $5260 and the IRS had the at $5545. Why is Turbo tax different from the IRS tax calculation?

[DoninGA]

Look at your federal tax return Form 1040 Line 16.  Are there any boxes checked for Line 16 indicating the taxes were calculated on a different form?  Such as Form 8814, Form 4972 or QDCG?

[Jane63]

There are NO boxes checked on line 16

[DoninGA]

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@Jane63 wrote:

There are NO boxes checked on line 16

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OK...thanks.

Back on the Form 1040, did you enter any Qualified Dividends on Line 3a?  Or did you have capital gains reported on Line 7?  If so, then the taxes were calculated using the Qualified Dividends & Capital Gains Tax Worksheet and not the IRS tax tables.

[NCperson]

@Jane63 were there any other details from the IRS on how they calculated the return?  TT would have calculated the tax the exact same way.  Did the IRS adjust something else.  For example, did you have any 1099-NEC forms?  that is self employed income and if you inadvertanly posted it as W-2 income, then TT would have under reported the tax on Line 16

[Critter-3]

If you purchased Audit Defense for your  tax return, call TaxResources, Inc. at 877-829-9695, or report your IRS letter on their web site. http://intuit.taxaudit.com/ Do not contact the IRS until you have spoken to TaxResources. They may contact the IRS on your behalf.

If you did not purchase Audit Defense, you can get help with your IRS letter from TurboTax at the following link.

We can help you with your IRS letter

[Jane63]

Yes I had QDCG and LT Capital gains. However, my taxable income was $39,082 for both TT and the IRS.  So no CG tax. There was NO Schedule C or E income. There is no calculation from the IRS for the difference in calculating the tax difference.  I can't figure out where the difference is. It's ironic that the difference in tax between TT and the IRS is $285 and the penalty for late filing which I electronically filed 3/31/2022 is $285 plus $16.38 for a total of $586.38 due.  Is it possible the IRS erroneously added $285 to taxes due and then put a penalty of the same amount $285 and then added interest on top of that?

[VolvoGirl]

The taxable income would be the same but If you have capital gains or qualified dividends the tax is not taken from the tax table but is calculated separately from schedule D.  The tax will be calculated on the Qualified Dividends and Capital Gain Tax Worksheet.  It does not get filed with your return.  You might have entered a 1099 wrong or missed checking a box.  

In the online version you need to save your return as a pdf file and include all worksheets to see it.

For the Desktop version you can switch to Forms Mode and open the worksheet to see it.  Click Forms in the upper right (upper left for Mac) and look through the list and open the Qualified Dividends and Capital Gain Tax Worksheet.

[NCperson]

<<Is it possible the IRS erroneously added $285 to taxes due and then put a penalty of the same amount $285 and then added interest on top of that?>>

yes, in their view, you were short $285 on April 17, so interest and poenalties accrued.  

Let's go back to the beginning.  When you state that TT calculated $5260, what line is that on? Can you please reconfirm that,  as your may provided us apples but we are responding with bananas...

Also, when you state your taxable income is $39052, please reconfirm what is on Line 15 - something doesn't make sense because if you taxable income was $39k, filing single, the tax would only be $4490 (and that assumes all the capital gains is ordinary income)

[Jane63]

Per TT

Line 15 $39,082

Line 16 $3,332

Line 17 $1,961 Excess Advanced Prem

Line 18 $5,293

Line 20 $33 Foreign Tax Credit

Line 22 $5,260

Line 25 c $3,704

Line 37 $1,556 Amount Due remitted and (cleared 5/12/22)

IRS Notice

Taxable Income $39, 082 same as TT

Total tax $5,545

The notice lists the amount received as $5,260

[NCperson]

@Jane63 thanks for all that information.... there are two areas that I suggest you review closer. 

1) I wonder if the problem is how the Excess Advance Premium was calculated.  Can you please review Form 1095-A and ensure it was correctly entered into Turbo Tax.  The IRS gets their information from the MarketPlace and I've seen examples where that is not working perfectly.  What is entered from Form 1095-A should display on Form 8962. 

Did you have Marketplace medical insurance all year? did you add or subtract it mid year? was there anything strange about it? Can you go back to your account at the Marketplace and be sure what they now have on file for form 1095A is what you entered into TurboTax?  

2) the other problem may be what you entered on Line 25a.  Can you please go back to each and every W-2 and be sure that what is in Box 2 on each form summarizes to what is show on Line 25a? if you overstated what was in Box 2, then that would have overstated Line 25a and meant you owed more. 

the tax itself on Line 16 doesn't appear to be the problem.  In the tax tables, $3332 is for someone with around $29400 of ordinary income so you must have had about $10,000 of capital gains / dividends. Does that fit you? 

does any of this help?