Tax Owed

Forum|Forum|5 years ago
April 15, 2021
4 replies
2 views

Am married filing jointly with line 15 showing $78,651. Turbotax gives $7,522 tax owed on line 16, but the IRS tax tables shows a tax owed of $9,028.

It looks like an error to me.

Please explain.

Other

VolvoGirl

Level 15

Even though the full amount shows up in the total income on the 1040 line 7, if you have capital gains or qualified dividends the tax is not taken from the tax table but is calculated separately from Schedule D. The tax will be calculated on the Qualified Dividends and Capital Gain Tax Worksheet. It does not get filed with your return. In the online version you need to save your return as a pdf file and include all the worksheets to see it.

For the Desktop version you can switch to Forms Mode and open the worksheet to see it. Click Forms in the upper right (upper left for Mac) and look through the list and open the Qualified Dividends and Capital Gain Tax Worksheet. See
https://ttlc.intuit.com/community/forms/help/form-1040-line-11-amount-is-less-than-standard-irs-tax-table/00/25752

rjs

Level 15

The tax table is only one of seven different methods that can be used to calculate your tax, depending on what is in your tax return. Your tax return must require one of the other methods. The most common reason that you cannot use the tax table is that your income includes qualified dividends or long-term capital gains.

In the IRS instructions for Form 1040, look at the instructions for line 16. Starting at the bottom of the right column on page 32 it explains the seven methods that can be used to calculate the tax on line 16.

If you are using the CD/download TurboTax software you can see which method TurboTax used by looking at the 7 checkboxes in the Tax Smart Worksheet. You can see the Tax Smart Worksheet in forms mode. It's between lines 15 and 16 of the Form 1040 or Form 1040-SR Worksheet.

Hbomb

Level 2

The other answers are good. Just to add that If you have a lot of qualified dividends the difference between TT calculated vs IRS table calculated can be huge.

In your example, if the entire 78k income was qualified dividends, then your tax owed would actually be zero because that the tax rate for qualified dividends up to 80k for MFJ filers is 0% ! So when they say that TT can save you money, they are not kidding. If you missed this one detail, you can end up paying a lot more in taxes.

maryma123

Level 2

good