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Cannot validate Turbo Tax Calculation

I'm using Turbo Tax Premier 2021 on Window 10.

I'm trying to figure out how Turbo Tax calculate the tax.  

Using the amount on line 15 of 1040, it show some X value.  If I use the 2021 tax table from IRS, it it does not result the same value what Turbox Tax is calculated on line 16.  Turbox Tax calculation is way more than the tax table calculation. 

 

Furthermore investigation, Turbox Tax does not use Tax Table.  It use "Qualified Dividends and Capital Gain Tax Worksheet".  And on that worksheet, line 22, it refer to another "Tax Computation Worksheet".  But I can't find any form call "Tax Computation Worksheet".

 

Regardless of how tax is computed, using "Tax Computation Worksheet" or "Tax Table", they should result in the same value.  Correct?  Why am getting different result?  Is my understanding on how to use tax table is wrong?  

How do I validate and verify that the tax calculation is accurate?

Has anyone ever question this or do we simply just accept the fate of TT code to be the master of tax calculation?

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2 Replies
BillM223
Employee Tax Expert

Cannot validate Turbo Tax Calculation

"Regardless of how tax is computed, using "Tax Computation Worksheet" or "Tax Table", they should result in the same value.  Correct?" - No, not correct.

 

"Qualified Dividends and Capital Gain Tax Worksheet" is used to calculate the income when you have either qualified dividends or long term capital gains or both.

 

Why? Because qualified dividends and long term capital gains are not taxed the same way that ordinary income is. On that worksheet, what it does is to remove the dividends and gains from the income on line 15 (1040), and then it calculates the income tax on the remainder using the Tax Tables, and applies the different tax rates to what was taken out. The qualified dividend and long term capital gains fall into one of only three tax brackets; 0%, 15%, and 20%.

 

Then the two taxes are added back together. This is why line 16 is not the same as what you get when you apply the Tax Tables to line 15. There are several other mechanisms for calculating tax (see the check boxes on line 16), but the method for qualified dividends and long term capital gains is far and away the most common after using the Tax Tables.

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Cannot validate Turbo Tax Calculation

What I want is a way to verify if the computed tax value on line 16 is accurate per whatever method that is being used by Turbo Tax.  The "Qualified Dividends and Capital Gain Tax Worksheet" doesn't have any explanation on how line 22 amount were calculated.  It made reference to a "Tax Computation Worksheet" which is no where to be found in the forms.

All in all, if there are different method of calculations, we should be able to follow through those method and validate and verify it ourselves.  Turbo Tax would need to provide that the method of calculation is checked and validated.

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