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testworld
New Member

After I add investment income of total $902, including $140 div, $509 int and $253 capital gain (all short term); tax due increased by $384. How can the tax be so high?

$384 out of $902 means a tax rate > 42% to me, how can it be higher than the highest income tax bucket of 37%? Does anyone know where can I find out how does Turbo tax calculate these numbers? Thank you a lot for your help!
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3 Replies

After I add investment income of total $902, including $140 div, $509 int and $253 capital gain (all short term); tax due increased by $384. How can the tax be so high?

Even though it shows up as income on the first page,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.

When you enter one taxable transaction, you can't just watch the monitor.  You increased your overall adjusted gross income and with that come many other changes in your return, not just the incremental tax on the one transaction.

 

Like for example it increased your AGI and that would decrease some deductions if you itemized on Schedule A.  And by increasing your AGI it might reduce some credits you were getting like EIC.  And can make more of any Social Security taxable.

 

You would have to compare both returns line by line before and after you entered the income to see all the changes.

 

testworld
New Member

After I add investment income of total $902, including $140 div, $509 int and $253 capital gain (all short term); tax due increased by $384. How can the tax be so high?

Thank you so much for the reply VolvoGirl! I guess I can only print out the pdf after I complete my tax filing with the online turbo tax version, is this correct? Hopefully Turbo tax someday can add a feature to explain tax changes dynamically, i.e. you added this 1K income, and it causes decrease in this and increase in that, thus you overall tax increased by $x. That would be a smart AI tax-gpt 😀

 

 

After I add investment income of total $902, including $140 div, $509 int and $253 capital gain (all short term); tax due increased by $384. How can the tax be so high?

You can print it anytime and you should before you file to check it over.  You will have to pay any fees to print out everything.  

Before filing,  You can preview the 1040 or print the whole return

https://ttlc.intuit.com/community/accessing/help/how-do-i-preview-my-turbotax-online-return-before-f...

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