Tax calculation

[dave2023]

I had $108K in taxable income in 2022, but Turbo Tax is only applying Schedule D tax -- $3,750.  Clearly wrong...??

[AnnetteB6]

Since TurboTax is calculating your Schedule D tax, your income tax is most likely being calculated on the Qualified Dividends and Capital Gains Worksheet.  When this worksheet is used to calculate income tax, your income is broken down into certain categories.  Long-term capital gains and qualified dividends are separated from other income and taxed at lower rates.

Going through that worksheet one line at a time would show how the total tax was calculated.  Take a closer look at line 9 for the portion of your income that may be taxed at 0%; line 17 for the portion taxed at 15%; and line 20 for the portion taxed at 20%.  

If you are using one of the CD/downloaded versions of TurboTax, you can find the worksheet by going to Forms Mode.  Click Forms in the upper right corner of the screen.  Then, look for Qual Div/Cap Gn in the list on the left side of the screen.

If you are using TurboTax Online, you will need to pay for your return and then print or preview the return to find the worksheet.

[dave2023]

Not there.  Just a "Schedule D Tax", which calculates the final amount.  But the rest of my income is not taxed anywhere.

[dave2023]

The first $83,350 is not taxed.

[dave2023]

It's like my deductions first offset income that's not capital gains, leaving only a little more than capital gains to tax.

[KrisD15]

Are you looking at your completed return? 

Are you looking at your 1040? 

Taxable income is computed and listed on your 1040 line 15.  

1040 line 16 will show the tax on ALL your income, not just your capital gain Tax. 

Taxable income is computed by applying deductions first to offset your gross income. 

Deductions are applied to your income as a total income amount, not to Capital Gains and Earned Wages separately. 

[dave2023]

Not completed, but close.  Looking at 1040 Line 15 for taxable income.  Line 16 is the tax ($3,800), which comes directly from Schedule D Tax.  Schedule D Tax takes 1040 Line 15 ($108K) and subtracts $83,350 (mfj) = $25K.  Tax is 15% of that = $3,800.  If 1040 Line 15 had been less than $100K, the tax table would have been used (=$15K).  This makes no sense.

[VolvoGirl]

The worksheet should be there.  There are like 7 different ways to calculate the tax.
It depends what kind of income you have. Even though the full amount shows up in the total income on the 1040 line 7, 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 the worksheets to see it.

[dave2023]

Ready to file.  That worksheet is not there, either in TurboTax (Premier, not online, up to date) or in the pdf of all forms.

[VolvoGirl]

Or are you using the Desktop program?  Have  you switched to Forms Mode?  Click Forms in the upper right or left and look around.   If the Tax worksheet is not in the list you can open it  by searching in the top of the list.  Then find it in the list of US forms in the right side.  

[dave2023]

Not online = desktop.

Okay, I was able to open a new Qualified Dividends and Capital Gain Tax Worksheet, but it's not filled out and I can't get it to populate.  However, filling it out by hand gives the same result as the Schedule D Tax Worksheet.

Ergo, deductions have been applied to all other income first and I'm only being taxed on what's left plus the residual Dividends/Capital Gains after the $83K exclusion.