Federal Tax Brackets

[sbaryotabor]

I need some help.  I am using Turbo Tax Deluxe.  I am able to complete 3 returns with the program I purchased. I am keying in a friends return.  The AGI is $29519 federal Tax showing in Turbo Tax is owed $16213.  The taxable percentage according to the IRS is 12%.  So 12% of the AGI of $29519 is $3542.28.   Turbo tax Deluxe is wrong. How come it is showing that the Federal income tax showing owed is $16213, when the 12% is only $3542.28? I will not submit the return as it stands. Please review and advise. 

Sincerely

Sandra 

[email address removed]

[xmasbaby0]

No one in the user forum can see your return or "review" it for you.    In order to have an expert review a return you would have to pay for that service.  

Start out by double checking all of the amounts you entered for your friend and make sure you did not add any extra zeros or misplace a decimal or use a comma where a decimal should have been used.  And take a second look at the AGI on line 11 that you are citing.    Tax due is shown on line 37 of the Form 1040.   

[rjs]

1. Calculating the tax is not as simple as applying a single percentage. Not all income is taxed at the same rate. If your friend's income is in the 12% bracket, some of the income is taxed at a 10% rate. Different types of income, such as qualified dividends and long-term capital gains, are taxed at different rates.

2. Tax is not calculated on AGI. It's calculated on the taxable income on Form 1040 line 15.

3. It's not clear exactly where you are seeing a tax rate "according to the IRS." You cannot use a chart of tax brackets, or the tax rate schedule, to actually calculate the tax. If taxable income is less than $100,000 you have to look up the tax in the tax table. You cannot use a calculation.

4. It's not clear what tax amount you are looking at. There might be other taxes besides the basis income tax. Are you looking at the tax on Form 1040 line 16, or at the total tax on line 24?

5. The amount owed is not the same as the amount of tax.

6. There are 7 different methods that can be used to calculate the tax on Form 1040 line 16, depending on the types of income and other things in the tax return. The tax table is only one of the 7 methods. The conditions for determining which of the 7 methods to use are explained starting on page 36 of the 2025 IRS Instructions for Form 1040.

If you are using the desktop TurboTax software you can see which method TurboTax used by looking at the 7 checkboxes in the Tax Smart Worksheet in forms mode. The Tax Smart Worksheet is between lines 15 and 16 in the first section of the "Form 1040 or Form 1040-SR Worksheet."

[Mike9241]

Tax is not computed on AGI (line 11) but on taxable income (line 15) . There are multiple methods that can affect the tax calculation because certain items get special treatment. If this person is self-employed, besides regular income taxes, there can be an additioanl 15% tax on net self-employment income. 

However, I think in your situation something was entered incorrectly.