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Why is my federal marginal rate 40%?
Using TT Deluxe 2021 desktop, I have entered estimates of nearly all my expected income. As an experiment, I added another $100 of interest income, and my federal tax due increased $40.
That is a 40% marginal tax rate, whereas the highest tax bracket is 37%, and my taxable income does not put me into even that bracket. (My gross income doesn't reach the 37% bracket, either.)
Adding $200 of interest increases my tax due by $81, and adding $300 of interest increases my tax by $122 -- a 41% marginal rate.
How is this possible? Is this a bug?
Some of my prior year income accounts are still blank, waiting for my 2021 Forms 1099 -- do these incomplete entries cause TT to make spurious calculations?
‎January 25, 2022
6:58 AM