My bad, it's for NY state tax calculation. They have a non-obvious method for calculating the income tax if the AGI goes above 107,650. The basic tax amount ( Tax1 ) is calculated using a tax rate schedule using NY Taxable income https://www.tax.ny.gov/pdf/current_forms/it/it201i.pdf#page=57 and then there is an add-on on top of that using Adjusted Gross income ( https://www.tax.ny.gov/pdf/current_forms/it/it201i.pdf#page=59 ) making it T2 ( T2 > T1 ), and then TurboTax applies a NY income tax factor which seems to be a ratio R of my Wage in W2 and AGI ( R comes out to be 1.0198 ). This makes my final tax obligation T3 = 1.0198 * T2, I don't understand why this R needs to be multiplied.
Why do you think you are being taxed just on the Wage number? Neither Gross nor AGI is what you are being taxed on, but rather Taxable Income.
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