For the 2024 tax year, I am trying to figure out why TurboTax used the Schedule D Tax Worksheet to calculate Line 9 on Form 8615 vs. the Qualified Dividends and Capital Gains Tax Worksheet.
My situation: Form 8615 Line 8 includes amounts from my (parent's) taxable income, which includes qualified dividends. Line 8 also includes amounts from my son's net unearned income, which also includes qualified dividends (via line 5, I presume). Based on how I interpret the Line 9 instructions ( https://www.irs.gov/instructions/i8615#en_US_2024_publink28914rd0e523 ), that means I should be using the Qualified Dividends and Capital Gains Tax Worksheet vs. what TurboTax used - the Schedule D Tax Worksheet.
There is no Schedule J on my (parent's) tax return, and there is no 28% rate gain or unrecaptured section 1250 gain on any of our tax returns. There is also no Form 2555 filed on the child's return.
Form 8615 lines 1 - 5 are as follows:
1) 2,954
2) 2,600
3) 354
4) 2,504
5) 354
Line 6 is my (parent's) taxable income from my Form 1040, line 15 which is inclusive of qualified dividends.
What am I missing? I am sure I am misinterpreting something but I cannot figure out what.
Thank you!
I assume you are looking at the Form 8615 Schedule D Tax Worksheet. That's where the tax on Form 8615 line 9 is calculated. TurboTax always uses the Form 8615 Schedule D Tax Worksheet just to simplify its calculations a bit. As long as line 11 of the Form 8615 Schedule D Tax Worksheet is zero, i.e. there is no 28% Rate Gain or Unrecaptured Section 1250 Gain, the result is the same as if the Qualified Dividends and Capital Gains Tax Worksheet were used, and it avoids having to have a separate worksheet in the TurboTax software.
The TurboTax help for the Form 8615 Schedule D Tax Worksheet says "The program always uses the Schedule D Tax worksheet for the computation regardless if there is any 28% rate gains or 1250 unrecaptured gains since it is all inclusive."
I assume you are looking at the Form 8615 Schedule D Tax Worksheet. That's where the tax on Form 8615 line 9 is calculated. TurboTax always uses the Form 8615 Schedule D Tax Worksheet just to simplify its calculations a bit. As long as line 11 of the Form 8615 Schedule D Tax Worksheet is zero, i.e. there is no 28% Rate Gain or Unrecaptured Section 1250 Gain, the result is the same as if the Qualified Dividends and Capital Gains Tax Worksheet were used, and it avoids having to have a separate worksheet in the TurboTax software.
The TurboTax help for the Form 8615 Schedule D Tax Worksheet says "The program always uses the Schedule D Tax worksheet for the computation regardless if there is any 28% rate gains or 1250 unrecaptured gains since it is all inclusive."
Thank you very much rjs. You are correct - I am looking at the Form 8615 Schedule D Tax Worksheet in TurboTax. And thank you for the explanation that TurboTax always uses the Schedule D Tax Worksheet. I cannot find that sentence you quoted in the Form 8615 help but that clears that part up as to the why. And yes, line 11 of Form 8615 is zero.
I found my error, thanks to you. I entered an incorrect value on one of the lines on the Qualified Dividends and Capital Gains Tax Worksheet, and that threw the remaining calculations off. After correcting, I do indeed get the same result per your statement, in comparing TurboTax's Schedule D Tax Worksheet resulting tax and the Qualified Dividends and Cap Gains Tax Worksheet resulting tax. Thank you!
@RandlePink wrote:
I cannot find that sentence you quoted in the Form 8615 help
Sorry, the reference in my original reply was mistaken. I have corrected it above. The sentence that I quoted is in the help for the Form 8615 Schedule D Tax Worksheet, not the help for Form 8615.