how does turbo tax calculate effective tax rate

TurboTax uses a more comprehensive approach to calculating the effective tax rate displayed in your return summary. While the general principle involves dividing total tax by Adjusted Gross Income (AGI), they also incorporate adjustments for certain credits and "other taxes". Specifically, they include tax from Form 8814 (tax for children under 18) and Form 4972 (tax on lump-sum distributions). Nonrefundable credits like the Child and Dependent Care Credit are also taken into account by being subtracted from the tax liability, potentially lowering the effective tax rate. Refundable credits like the Child Tax Credit and Earned Income Tax Credit are also subtracted, and a negative effective tax rate is possible if these credits exceed your tax liability.