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keb329
New Member

In TT why do my taxes go up by $12 for a $24 1099-INT addition?

 
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AnthonyC
Level 7

In TT why do my taxes go up by $12 for a $24 1099-INT addition?

The likely explanation is due to the way the tax table itself works.  It is not a straight percentage, but rather a graduated rate where every $50 of income results in additional tax due.  Its possible to see a small amount of interest can push you over into the next $50 bracket, which then causes an increase in tax liability.  

For example, a single taxpayer with $40,049 in taxable income that enters a $2 interest income would actually see a $12 increase in tax liability.  It might be easiest to see if you look at the tables themselves at the link below -

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1 Reply
AnthonyC
Level 7

In TT why do my taxes go up by $12 for a $24 1099-INT addition?

The likely explanation is due to the way the tax table itself works.  It is not a straight percentage, but rather a graduated rate where every $50 of income results in additional tax due.  Its possible to see a small amount of interest can push you over into the next $50 bracket, which then causes an increase in tax liability.  

For example, a single taxpayer with $40,049 in taxable income that enters a $2 interest income would actually see a $12 increase in tax liability.  It might be easiest to see if you look at the tables themselves at the link below -

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