2024 Tax Calculation is wrong

[thohman55]

I'm using TurboTax Desktop and it is calculating my FIT liability higher than what I'm calculating by hand.  Where do I find this calculation in TT?  I've been using TT for years and never had this problem.  I always manually check all the amounts TT provides and make sure I have support for all the numbers?

[BillM223]

A common issue is when the taxpayer has qualifying dividends or capital gains, because these are taxed differently than ordinary income. There is a worksheet for this called Qual Div/Cap Gn, which you can see in the desktop product by going into Forms mode (upper right) and looking for "Qual Div/Cap Gn" on the left.

There are a number of other tax calculations as well (considerably less common). Look on Line 16 on the 1040 - were any of the boxes checked? If so, then go to those forms for the tax calculation.

Where do you see the error? I ask because the tax appears to be calculated in a number of places, and it difficult to talk about this if we don't know which line you are concerned about.

[thohman55]

Hi Bill,

Thanks for your response.

As far as other income, I do not have qualified dividends or capital gains to report.

None of the boxes for Line 16 are checked.

This is a basic calculation.  Per the 2024 tax table MFJ, the tax rate is 10% on the first $23,200 and 12% on the amount over $23,000.  I do this calculation on a calculator or in a spreadsheet and it is lower than TurboTax's calculation.  Clicking on Line16 takes me to the Tax Smart Worksheet which only show the tax amount.  In grade school we were told to show your work.  I want to see the calculation in TurboTax to see who is correct.

Thanks.

Tim Hohman

[DoninGA]

@thohman55 What is the amount of taxable income on Line 15 of the Form 1040?  And the amount of taxes on Line 16?

The taxes on Line 16 can be calculated differently based on the type of income entered.

Go to the Form 1040 Instructions for Line 16 and see if your taxes are affected by the various taxes that can be applied - https://www.irs.gov/pub/irs-pdf/i1040gi.pdf#page=33

[thohman55]

DoninGA,

I am not sharing personal information on this chat.  The taxable income on line 15 is under $94,300 and over $23,200.  I have seen rounding of $1.00 in TurboTax from time to time, but I want to see how the calculation in TurboTax to see why I have a different amount.

Thanks,

Tim

[DoninGA · Accepted solution]

@thohman55 OK...But you are not going to find how the taxes were calculated in TurboTax if the tax tables were used.  That is an internal calculation that is not visible to users.

Since your taxable income is less than $100,000 and assuming no other type of income other than taxable interest, dividends and wages were entered, the the taxes should be based on the tax tables on pages 64 thru 75 in the Form 1040 Instructions - https://www.irs.gov/pub/irs-pdf/i1040gi.pdf

[thohman55]

Thanks DoninGA.

In the past I've just calculated my tax amount without the tax table.  I see now where TurboTax gets the tax amount.

Thanks for your help.

Tim

[NotWarrenBuffet]

I had a similar issue that makes me think TurboTax Online might have a bug in its tax calculation.  In my case the taxable income on line 15 of the 1040 is over $94,000 which should imply a Tax of at least $9,400.  Instead line 16 shows a tax of $3,800 and no boxes are checked.  I do have qualified dividends but that still wouldn't result in a tax rate under 5%.  My first attempt at support through TurboTax did not produce an answer.  I'm calling again this morning to see if a different representative can figure something out.   I'm posting this in case others are seeing strange calculations on line 16 as it sure looks like a bug to me.

[BillM223]

NotWarrenBuffet - we have see many posts over the years about a supposed tax calculation error in TurboTax, but the calculation "error" has almost always been (always in my personal experience) that the taxpayer had something in their tax return that caused TurboTax to use a calculation other than the Tax Tables or Tax Rates.

Look for a worksheet (if you have the desktop product, click on Forms on the upper right for Qua Div/Cap Gn for the calculation if you have either qualified dividends or capital gains) that shows the calculation of your tax.

@NotWarrenBuffet 

[wrn2pa]

My total taxable income after the standard deduction is $36,709.  TT is stating that I owe $5,392.  But, that doesn't align with the US tax tables for 2024:  10% for the first 11,600 and 12% for everything thereafter, thus $1,160 + ((36,709-11,600)*.12) = $4,173.08.  I'm not a mathematician nor an accountant but the math seems pretty straightforward. I'm wondering now what other internal errors there might be.

[MonikaK1]

There may be several reasons that your total Federal tax liability doesn't match the tax tables.

A blended tax rate, also known as the effective tax rate, is derived from a number of factors. The effective tax rate for individuals is the average rate at which their earned income, such as wages, and unearned income, such as stock dividends, are taxed. If you received income from a variety of things like stocks and bonds, interest, dividends, or self-employment, they may all play a role in determining your blended tax rate. See this thread for another discussion of this issue.

For Federal income taxes, the tax rate brackets for 2024 are 10%, 12%, 22%, 24%, 32%, 35%, and 37%. To see how the tax brackets apply to you for this year, and for a tool to determine your marginal (the highest part of your income) tax rate, see here.

Also, note that taxes are often calculated using a different method than the tax tables. For example, if you have capital gains, the tax on those is calculated at the capital gain rate for your income level. If you are self-employed, you may have self-employment taxes in addition to income taxes.

See this help article for more information.

You can preview your return before filing to find out how your taxes were calculated. See here for details. 

[wrn2pa]

Hey MonikaK1,

So, there no are self-employment, no capital gains, no dividends, no stocks; even if there were, TT is stating that the taxable income for me (a single filer) is $36k and change. If TT isn’t using the tax tables because they are using their own formula, then it’s better for me to just perform the exercise using IRS forms and submitting manually, thereby spending less on taxes and saving money that I’d otherwise be paying to TT. (BTW, I did do the calculations by hand and that’s how I recognized the discrepancy—my sis is an accountant and she checks my work.)

[cktigges]

I agree the tax calculation is wrong.  I too very carefully calculate the tax liability using the IRS tax tables and this year TT calculated federal taxes at slightly over $1000 more than I did using the tax tables.   My taxes are straight forward with nothing unusual.  This has never happened before in the 20+ years I have been using TT.  

Turbo Tax needs to re-examine their coding.  How many hundreds of thousands of people have now filed with incorrect  results and are over-paying their taxes or receiving a refund that is short?  It will take YEARS before the IRS catches the error.

[wrn2pa]

So, I went back and completed the forms by hand.  For me, the amount ended up being correct, because the IRS adds back in excluded foreign earned income to "adjust" the tax rate.  The effect, of course, is that I am taxed on money that should be completely excluded, because I am already taxed in the country where the money is earned.  In any case, I was able to come up with the same amount as that calculated by TT.

[jnfrench]

When I look in the Qualified Dividends and Capital Gains Tax Worksheet, which shows the brackets for ordinary income, I see $47,025 for the 12% bracket, but the IRS has $47,150 for this bracket. I am sure there is a simple explanation, but I would have expected these numbers to be the same.