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Level 3
posted Feb 1, 2025 12:53:17 PM

Too much tax on 1099-DIV

I'm working on my 2024 taxes. One of my investments is 1099-DIV 1A) 4264.89, 1B) $719.57, 2A) 5500.95.

 

I'm being charged $2192 in taxes on this, thats almost 40%. I'm doing something wrong, can someone point me in the right direction please?

 

best,

 

Chris

0 5 450
5 Replies
Employee Tax Expert
Feb 2, 2025 9:19:35 AM

If you are basing the claim of paying $2192 in taxes on the income entered from your Form 1099-DIV by looking at the change in your balance due or refund, your statement is not necessarily true.  

 

It is possible that the addition of the dividend income and capital gains distribution has moved your return into another tax bracket or affected a credit being claimed which in turn would affect your bottom line balance due or refund.  It is better to enter all of your information before paying close attention to the end result.  

 

That being said, you should go back through the Form 1099-DIV entry to be certain that the numbers were entered correctly.  

Level 15
Feb 2, 2025 9:21:39 AM

When you enter one taxable transaction, you can't just watch the monitor. You increased your overall adjusted gross income and with that come many other changes in your return, not just the incremental tax on the one transaction. More income can make more of any Social Security taxable and can increase or decease any credits you qualified for.


And it increased your AGI and that would decrease some deductions if you itemized on Schedule A. And by increasing your AGI it might reduce some credits you were getting like EIC. It could be the Medicare Net Investment tax.

Level 4
Feb 2, 2025 11:11:17 AM

That appears to be exactly 24% therefore that's your bracket for your ordinary income.  1a - 1b + 2a = $9045.  24% of that is $2171 which is your ordinary dividends and I imagine short term capital gains.  Your qualified dividends on 1b should be taxed at 15%.  

 

Nothing fancy going on here.  Just basic 24% income tax bracket.

Level 15
Feb 2, 2025 11:16:38 AM

@annieland   You don’t add the boxes together.   Box 1b is just the part (or all) of 1a that is qualified dividends.  1b is already included in 1a.

Level 4
Feb 2, 2025 11:18:02 AM

Right, that's why I subtracted it, to use the portion that would be taxed as ordinary income.