If your income hits the 32% marginal tax bracket, the intuit taxcaster applies the 32% rate to all taxable income, rather than just the amount in the 32% bracket? Why?

jupurtle · ‎December 31, 2020

I'm trying to figure out if I should make some last minute adjustments to my income taxes based on the taxcaster. The taxcaster shows me owing an enormous amount of money (more than I've ever owed before) despite having many more deductions this year and similar income to last year. So I think there is a glitch in the taxcaster, but wanted to see if anybody knows for sure? If you cross the 32% marginal tax bracket threshold, it makes no sense that the rate gets applied to every penny of taxable income . . . right?

NCperson · ‎December 31, 2020

I just tried it myself and YES, there is a BUG!!

I tried an income of $175,700 as a single taxpayer, which reduces the taxable income to $163,300, which is the top of the 24% tax bracket. I got $33,272 of tax, which is correct.

then I tried an income of $176,000 as a single taxpayer, which is a taxable income of $163,600 which just tips into the 32% tax bracket . I got $50,458 of tax.

Increasing the income by $300 increases the tax by $17,000!!!! I know this is a progressive tax system, but not that progressive!

That makes no sense!

@Critter-3

@VolvoGirl

can someone communicate this to the Lounge Moderator!!!

jupurtle · ‎December 31, 2020

Thank you! Glad I am not crazy.

If your income hits the 32% marginal tax bracket, the intuit taxcaster applies the 32% rate to all taxable income, rather than just the amount in the 32% bracket? Why?

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