Get your taxes done using TurboTax

The tax table is not the only source of tax calculation.  There are times when you need to use other methods to calculate your tax due - one reason being tax rates can be different depending on the source of income.

This is especially true when you have dividends or other capital gains as sources of income.  If any of your dividends were qualified dividends, then capital gains tax rates would apply to those dividends.  Capital gains tax rates are often lower than regular tax rates, and long term capital gains rates can be as low as 0% for those in the 10 and 15% tax brackets.  

In these cases, TurboTax uses the Qualified Dividends and Capital Gains Tax Rate worksheet to calculate your tax due (per the IRS).  This is likely the cause of the tax liability discrepancy.  You can check for qualified dividends on line 9b on your Form 1040A and other capital gains may appear on line 10.

See pages 25-26 for information on qualified dividends.  And page 39 for the worksheet.

View solution in original post