IRS agreed with the following: AGI, Form 1040 line 11 Taxable income, Form 1040 line 15 Turbo tax comes up with: Total tax,1040 line 24 IRS doesn't agree with Total tax.

[rjs]

What year is the IRS notice about?

What are the exact amounts on Form 1040 lines 15 through 24?

Does the IRS notice change or disagree with anything else anywhere on the tax return? Does it say that anything is missing? Does it say why they think the total tax on line 24 is wrong?

[Critter-3]

Did you mail in the return ??    Did you have qualifying dividends or long term capital gains ? 

[chewkong]

Thank you for your reply.

>What year is the IRS notice about?

2021

>What are the exact amounts on Form 1040 lines 15 through 24?

Line 15 is taxable amount. IRS agreed with this number. The amount in line 16 is from Turbo Tax, and there are no numbers from 17 till 23. Hence the number in line 24 which is total tax is the same as line 16. IRS doesn't agree with this number. Turbo tax gave me $4603 (Turbo Tax must have looked at the tax table to figure out this number from line 15) but IRS said it was $7303, a difference of $2700.

>Does the IRS notice change or disagree with anything else anywhere on the tax return? Does it say that >anything is missing? Does it say why they think the total tax on line 24 is wrong?

IRS agrees with AGI, line 11 and Taxable income, line 15. And they disagree with line 24, Total tax.

The letter doesn't say why or how they came out with $7303.

[chewkong]

>Did you mail in the return ??  

I mailed in the return. The letter came very late, notice date is Oct 24, 2022. I have to pay interest on the difference.

>Did you have qualifying dividends or long term capital gains ? 

I have qualifying dividends and capital lose. Don't think these numbers matter. IRS agreed with line 15 which is Taxable Income.

Turbo Tax should calculate line 16 (Tax) from tax table. And IRS doesn't agree with the number that Turbo Tax came up with?

[Critter-3]

Ok ... so if you mailed in the return the data input operator at the IRS may not have acknowledged your qualifying dividends or cap gains so you will need to disagree with their determination of taxes.   Save a PDF of your return with all the worksheets to find the Qualifying Dividend & Cap Gain Worksheet  for the tax calculation done by the program which is  allowed based on your income.  The tax table is not always used.  

[rjs]

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@chewkong wrote:

Turbo Tax should calculate line 16 (Tax) from tax table.

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No. If you have qualified dividends the tax cannot be taken from the Tax Table. The tax has to be calculated on the Qualified Dividends and Capital Gain Tax Worksheet, or possibly the Schedule D Tax Worksheet, depending on what else is in your tax return.

We cannot check the tax calculation because you have not told us your taxable income on line 15, and we do not know your filing status and the amount of your qualified dividends. There might be other information needed as well, particularly from Schedule D. But it does seem likely, as Critter-3 suggested, that some information from your mailed tax return was entered incorrectly in the IRS computers. That would mean that TurboTax is correct and the IRS is wrong. It does happen.

Carefully follow the instructions in the IRS notice for what to do if you disagree with it. Keep a copy of everything you send, and send your response by certified mail with a return receipt so you have tracking and proof of delivery. Be sure to reply by the date specified in the notice.

[VolvoGirl]

There are like 7 different ways to calculate the tax.  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 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.

[dmertz]

If you have capital gains only from Forms 1099-DIV, no Schedule D will be included in your tax return.  Instead, the "not required" box on Form 1040 line 7 is marked.  With a mailed tax return, it's not uncommon for the data transcriber to overlook the marking of this box, particularly in this time of the IRS having less experienced and overworked data transcribers.  You can determine if this has happened by obtaining your tax return transcript for the year in question and comparing the transcript to what you filed.

Usually when there is an amount on Form 1040 line 7 and the transcribed tax return has no Schedule D or marking of the "not required" box the IRS will ask you to supply what it thinks is a missing Schedule D.  It's usually easier to just comply with that request instead of trying to explain that no Schedule D was required and that the IRS erred in not transcribing the "not required" box marking properly.

[chewkong]

>If you have capital gains only from Forms 1099-DIV, no Schedule D will be included in your tax return.  Instead, >the "not required" box on Form 1040 line 7 is marked.  With a mailed tax return, it's not uncommon for the >data transcriber to overlook the marking of this box, particularly in this time of the IRS having less experienced >and overworked data transcribers.  You can determine if this has happened by obtaining your tax return >transcript for the year in question and comparing the transcript to what you filed.

My return included Schedule D. Form 1040 line 7 "not required" is not checked.

>Usually when there is an amount on Form 1040 line 7 and the transcribed tax return has no Schedule D or >marking of the "not required" box the IRS will ask you to supply what it thinks is a missing Schedule D.  It's >usually easier to just comply with that request instead of trying to explain that no Schedule D was required >and that the IRS erred in not transcribing the "not required" box marking properly.

I have qualified dividends. And it's stated clearly on Form 1040 line 3a.

I generate the worksheets in PDF. Looked at the steps of how Turbo Tax came up with the number for line 16. If IRS had mistakenly ignored qualified dividend, the difference would have been: $1452. But IRS's letter claimed that the line 16 is off by $2700.

Should I find out the $2700 difference before I call IRS? Or should I call IRS and work out with the agent to find out?

Thanks always for the reply.

[chewkong]

Thank you for the reply.

I did save the return with worksheets. Looked at the worksheet for qualify dividend and capital gain. If qualified dividend is missing (I had qualified dividend in line 3a), then the difference is $1452 not $2700 as IRS claimed.

I will be looking at other worksheets.

Thanks

[NCperson]

@chewkong interesting that the diffence is EXACTLY $2700.... there is an old math trick from the bygone era of data entry (which unfortunately the IRS still does on paper filed returns).....when you add up a column of numbers twice (which is what we have here - your return  is one column and the data entry is another column) and the sum of the digits in the differience equals "9", there is a key punch error.  

So 2+7 = 9......key punch error!!!!!!

[VolvoGirl]

The rule is......lIf the difference is divisible by 9 evenly it could be a transposition error.  2700 / 9

[chewkong]

Thank you all that replied to my question. The mystery is solved, and IRS agreed to my original filing.

I called IRS today, after waiting for an hour, an agent answered. After telling her that IRS doesn't agree to line 16. She said the problem is with Form 8962, Premium Tax Credit. I had Covered California health insurance in 2021. There are many columns in the form. At first she said, column a and e don't match. Then I told her that my return included Form 8962, therefore my numbers and IRS numbers should match in those columns. After a while, she said that line 5 which should be line 3 (AGI) divided by line 4 (poverty line) multiply by 100 should be much higher. Except that I have received unemployment in 2021, therefore line 5 should be 133%. Turbo Tax is correct again. The agent is very professional and patient. I am happy with the outcome.

I don't understand how disagreement on Form 8962 could led IRS to agree on Form 1040 line 11 (AGI), and line 15 but not line 24. Disagreement on Form should only affect Tax Credit, either IRS pays you because you received too little health premium in 2021 or IRS asks you pay back premium which you had received too much of it.  

By looking at the IRS notice, you could never guess it's Form 8962. Lesson learned, should always find out why by calling IRS. Don't just give up and pay. 

Once again, thank you all for helping.