Does anyone know if Turbotax uses the Qualified dividends and Capital Gain tax worksheet Line 16 to figure your tax when you don't have to file schedule D?

[josephelterman]

I just completed my taxes and it appears that their algorithm does not.  As a result, my capital gains all were calculated at short term rates instead of long term.  Now I will need to send an amended return.

[JohnW152]

Yes, TurboTax uses the Qualified Dividends and Capital Gain Tax Worksheet – Line 16 when you have capital gain distributions but aren’t required to file Schedule D.  

Instead of Schedule D figures, the calculation uses the amount from Form 1040 or 1040-SR, line 7, as required by the worksheet.

Please see the worksheet in 2021 Instruction 1040 for more information.  Also note the “*” at the bottom of the worksheet if you’re filing Form 2555.

[josephelterman]

John,

Thank you so much for replying.  I can tell already that you are by far the most knowledgeable of any of the experts that tried to assist me while I was working on my taxes.  So, firstly, I did not need to file Form 2555.  Secondly, when I did the calculations manually on the Qualified Dividends and Capital Gains worksheet ---Line 16, I was astounded to find that TurboTax actually entered the larger of lines 23 and 24 rather than the smaller amount which the instructions tell you to do, on my line 16.  As a result, my tax bill to the Federal government was nearly 3 thousand dollars higher than it should have been.  I would like to know how did this happen?  

I suppose the next step would be to file an amended return.  Before I do that, I would like to have a qualified expert, such as yourself, run the numbers with me to determine if I am correct or not.  Would that be possible?

Again, I am so appreciative of your considered reply.  You wouldn't believe the variability in the TurboTax experts' knowledge concerning capital gains tax treatments.

[DawnC]

On your Form 1040 worksheet (1040/1040SR Wks), what box is marked in the Tax-Smart Worksheet section - Line A (Tax)?   That will tell you which worksheet, if any, TurboTax used to calculate your tax liability on Line 16 of Form 1040.    In the example below, the tax comes straight from the tax table, no worksheet is necessary.   

[josephelterman]

Oh, now I see!   Thank you all for your kind assistance.   I think what threw me off was the fact that line 24 on the QD and CG worksheet turned out to be exactly what turned out to be on line 24 of my 1040... so instead of doing more fact checking, I jumped to the conclusion that TurboTax used line 24 of the QD and CG worksheet instead of line 25!.  So.... my humble apologies to all and thanks again for your help!  Have a blessed day!