I'm not a tax expert, but I thought for even higher taxable income that the max taxable rate doesn't go any higher that 37%. So 54.6% has to be wrong. My taxable income is only $25 and turbo tax is showing my blended tax rate of 168%. I can't figure out how to get in touch with Turbo Tax directly to tell them something is wrong with their program. Never had this problem in the past.
DMertz offers this explanation:
Do you mean that you yourself are calculating a marginal tax rate of 54% on a certain amount of self-employment income? While not common, a 54% marginal tax rate on the addition of some amount of self-employment income is entirely possible due to side effects of the increase in your AGI from the self-employment income even though your ordinary income falls in the 10% tax bracket. Compare the details of your tax return with and without the additional income to see what is contributing to the change in tax.
I am dealing with the same issue. My blended tax rate jumped from 10% last year to 46.8% this year. I only earned $6000 more this year so am highly confused. I thought this might be a glitch, so tried on another free tax program and got the same results.
It is hard to just ignore when it means more than nothing. It is saying I owe $8,000 more in taxes than had expected. I want to know where this calculation is coming into play.
Ok then you need to review the ACTUAL return to see what is happening ... maybe compare it against last year's return to see why they are different ... maybe you made a data entry error.
You can peek at only the Federal form 1040 and the summary of the state info by going here:
1) lower- Left side of the screen...click to the left side of the "Tax Tools" text selection.
2) then select "Tools"
3) then select "View Tax Summary" from the pop-up
4) then back to the left-side and "Preview 1040"
Then hit the "Back" on the left side to get back to your tax entries.
To view your entire return using the online editions (including the state) before you file, you will need to pay for your online account.
To pay the TurboTax online account fees by credit card, without completing the 2018 return at this time, click on Tax Tools >>> Tools and then Print Center. Then click on Print, save or preview this year's return. On the next page, to pay by credit card, click Continue. On the next screen it will ask if you want Audit Defense, if you do not want this option just click on the Continue button. The next screen will ask for all your credit card information so you can pay for the account.
I have figured it out (in my case at least)! Hopefully you made the same stupid mistake I did. In boxes 12 A-D I entered them A-D when really they were marked DD, D, AA, and W. So double check your W2 against what you entered!