Questioning TurboTax Tax-owed calculation

Forum|Forum|4 years ago
February 12, 2022
2 replies
11 views

I hate to even bring this up, but in doing my sister's (70+) 2021 taxes, she comes up with a Line 15 Taxable Income of $49,044 - and the TurboTax calculated Tax on Line 16 shows a Tax of $6,357.

I am sure I am missing something, and I shouldn't complain since the tax is lower,

but when I do the tax calculation by hand, I come up with a tax of $6,538.

(2021 Tax brackets of $9,950, $40,525 for the 10%, 12% & 22% brackets - giving $8,519 @ 22%)

Additionally, using one of the on-line Tax calculators, they also come up with a $6,538. Tax.

Even using the Tax Table from the IRS 2021 Publication 17 Tax Guide, it shows a Tax of $6,534.

SO, WHAT ARE WE DOING WRONG?

ron in shawnee

Best answer by AnnetteB6

There is most likely nothing you are doing wrong. The tax calculators, tax bracket calculations, and tax tables all calculate income tax based on ordinary income. They do not take into account items such as qualified dividends or capital gains that are taxed at a lower rate than ordinary income. If a portion of the total taxable income was due to qualified dividends or capital gains, then the overall tax will be less. How much less will depend on how much of the income is being taxed at a lower rate.

As suggested by user cr-stagg, you can see how the tax is calculated by taking a look at the Qualified Dividends and Capital Gains Worksheet.

@roninshawneeKS

cr-stagg

Level 4

Did your sister receive a 1099-combined? If she had qualified dividends then the Qualified Dividends and Capital Gains Worksheet was used to calculate the tax owed. Go to forms and look for the worksheet..

AnnetteB6Answer

Level 15

As suggested by user cr-stagg, you can see how the tax is calculated by taking a look at the Qualified Dividends and Capital Gains Worksheet.

@roninshawneeKS

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roninshawneeKSAuthor

Level 5

cr-stagg, Annette-

You are absolutely right - and I apologize for forgetting about that.

Yes, my sister had about $2,563 in Cap Gains that should have been only taxed at 15% vs. 22% since she was over the $40,525 12% limit.

I have spent a lot of time researching how Cap Gains affect your taxes and even went so far as to build a spreadsheet from the Qualified Dividends and Capital Gains Worksheet just to see how Cap Gains affect my own taxes. The Worksheet is somewhat hard to follow, at least for me (whoever did it is probably brilliant) but it works and plugging the figures in my Note into my spreadsheet, it comes up with $6,359 (as opposed to $6,357 calculated by TurboTax). I won't worry about the $2 difference - probably due to rounding of exact values in TurboTax, but it validates everything for me and resolves my question.

Yes, thanks for setting me straight (again) - and I really can't believe I overlooked that (will mark answered).

ron in shawnee