On 1040
*Line 16 Tax for my line 15 Taxable Income is way too low.
*On Line 20, the credit from Schedule 3 (line 6f for plug in vehicle) coincidentally (?) is the exact same number as my Tax on line 16.
*This leaves me with line 24, Total Tax as 0 (zero).
*Through Turbotax, I have selected "Send File to Tax Agent" and received a token. I use Norton's VPN, are you able to identify my file and respond? If so, does the response come through Turbotax?
Taking a look at your return, everything appears to be correct even though it seems unbelievable.
Your income is a mix of ordinary income and capital gains/qualified dividends. Qualified dividends and capital gains are treated differently than ordinary income in that the tax rate applied to that type of income is lower, and can even be 0%. In your case that is exactly what is happening. All of your qualified dividends (Form 1040 line 3a) and your capital gains (Form 1040 line 7) are not taxed at all. This leaves the rest of your income to be taxed based on the tax tables.
All of these calculations are done on the Qualified Dividends and Capital Gains Worksheet which you can see in Forms Mode by clicking Forms in the upper right corner of your screen. Look for Qual Div/Cap Gn in the list of forms and take a look at line 9 showing the amount taxed at 0%. On this same form, take a look at lines 23 and 24 where the income tax is determined.
To answer your specific questions:
1 - This number is based on the tax tables, but only for the income that is not qualified dividends or capital gains.
2 - Your line 24 tax is zero because your Qualified EV motor vehicle credit has 'paid' the tax for you.
3 - You are getting back all your withholdings because none of it was needed to cover any income tax after taking your EV credit into account.
4 - Your EV credit would have been up to $7500, but it was limited by the amount of income tax on your return. Since your tax was less than $7500, the credit covered the whole amount. The remaining portion of the $7500 is not refundable to you.
5 - Generally state returns start with the Federal Adjusted Gross Income (AGI). They do not have the favorable tax treatment for capital gains that you are seeing on your Federal return.
In order to be able to retrieve your tax file and take a look, you must post the token number here.
After someone has had a chance to take a look at the situation, any response will also be posted here.
In addition to sending your token number, please include information about what version of TurboTax you are using -- online or CD/downloaded, and Deluxe, Premier, etc.
Also, to clarify what the issue is, please add any specific questions you have about the return to be sure the right thing is addressed.
My questions are:
Thank you for your prompt response.
Taking a look at your return, everything appears to be correct even though it seems unbelievable.
Your income is a mix of ordinary income and capital gains/qualified dividends. Qualified dividends and capital gains are treated differently than ordinary income in that the tax rate applied to that type of income is lower, and can even be 0%. In your case that is exactly what is happening. All of your qualified dividends (Form 1040 line 3a) and your capital gains (Form 1040 line 7) are not taxed at all. This leaves the rest of your income to be taxed based on the tax tables.
All of these calculations are done on the Qualified Dividends and Capital Gains Worksheet which you can see in Forms Mode by clicking Forms in the upper right corner of your screen. Look for Qual Div/Cap Gn in the list of forms and take a look at line 9 showing the amount taxed at 0%. On this same form, take a look at lines 23 and 24 where the income tax is determined.
To answer your specific questions:
1 - This number is based on the tax tables, but only for the income that is not qualified dividends or capital gains.
2 - Your line 24 tax is zero because your Qualified EV motor vehicle credit has 'paid' the tax for you.
3 - You are getting back all your withholdings because none of it was needed to cover any income tax after taking your EV credit into account.
4 - Your EV credit would have been up to $7500, but it was limited by the amount of income tax on your return. Since your tax was less than $7500, the credit covered the whole amount. The remaining portion of the $7500 is not refundable to you.
5 - Generally state returns start with the Federal Adjusted Gross Income (AGI). They do not have the favorable tax treatment for capital gains that you are seeing on your Federal return.