1040 Tax Rate

[cR 1 1]

I was reviewing a 1040 and got confused when looking over the numbers entered into the 1040 from Turbo Tax concerning tax rates. Are the rates that Turbo Tax lists on my online summary/on the 1040 an estimated/rounded percentage?

In my Turbo Tax summary, it lists the blended tax rate as 11.5% and then on the actual return, Turbo Tax writes the effective rate is 8.57%. If total gross income is $57,801.13 and tax withheld was $4968.06 (with standard deductions 14,600 and no credits), then all my math is coming to $4953.56 as my total tax liability owed. But TurboTax is listing $9555 as my total tax owed - how are they calculating this number? (Even If you calculate the total taxable income (subtract the standard deduction)  and multiply by the other blended 11.5% rate they showed it’s a totally different number ($4968). 

im confused how a turbo Tax is totaling these tax rates and I’m not sure what is correct on my 1040. 

[KeshaH]

Is any of your income subject to other taxes such as self-employment tax? 

If you'd like, we can look at your return and see exactly what you see and explain how the tax is being calculated. The return will be scrubbed and won't include any of your personal details.

If you're using TurboTax Online:

Once you're logged in to your account and have your amended return open,

- on the left hand panel, click on Tax Tools and then choose Tools

- on the pop up window, select Share my file with Agent

- you'll see a message saying you'll give us a copy of your tax return. Your personal information will be changed so we can't see any private information.

- click okay and you'll get another message with a token

If you're using TurboTax Desktop:

• Click on Online in the top menu of TurboTax Desktop for Windows
• Select 'Send Tax File to Agent'
• Write down or send an image of your token number and state then place in this issue.
• We can then review your exact scenario for a solution

Please reply to this message with your token so that we can further assist you. Let us know all other states that are included on the return.

[cR 1 1]

Hello! 

no I don’t believe any of my income is subject to other taxes. Just what is shown on my W2 (federal tax withheld, SS tax withheld, Medicare tax withheld, state income tax). No self employment - and all my income is on my 1 W2. 

Georgia is the only state included on my return - single filer, standard deduction (14,600). The token number is 1305491. 

thank you for your help! 

[DawnC]

You tax return is good to go and can be filed; you should ignore that Blended Tax Rate number.    Take a look at this article that explains the marginal and effective tax rates.   These ratios are more commonly used and more useful to you as a taxpayer.  

Blended tax rate = tax liability / taxable income, but as shown below, the number is a modified version of the effective tax rate, used only by TurboTax.  

More detailed, the Blended Tax rate is:

• Tax liability (Including SE tax, capital gain and special taxes),
•  Divided by  ÷
• Taxable income (Total income minus deductions, but before credits).   

---

There is a supplemental form included with your tax return titled Tax History.   Take a look at that page; the next to last line is your Effective Tax Rate.   You can see your rate has been about 8% since 2022.  So, there is nothing alarming on this year's return compared to previous years.  You can file your return with confidence!   

[cR 1 1]

Hello! I appreciate the clarification and the information! So it sounds like the effective and marginal rates are more relevant here than the blended tax rate?

So in the above snip from the my Turbo Tax return where it says the effective rate is 8.57%, is the $4955 total tax amount correct (even though 8.57%/0.0857 multiplied by the $57,801.00 income technically equals $4953.55)?

As in the calculator snip above - I think that’s where I’m getting confused because the math keep giving me a $4953.55 total and not the $4955 total showing from Turbo Tax. 

appreciate your help! 

[KeshaH · Accepted solution]

Yes, the $4,955 is correct. For taxable income under $100,000, the tax usually comes from the IRS Tax Tables, which shows the tax as $4,955 for your income level. 

[baldietax]

8.57 is rounded down a little, it's calculated from the tax not the other way around so if you do 4955/57801 =0.08572516 =8.572516%

[cR 1 1]

Ah, I see now! I really appreciate the visual of the tax table - this makes more sense to me where the number is coming from now. Thank you all so much for all the clarification with this because I was having trouble wrapping my mind around it all. 

have a great week! 

[cR 1 1]

@baldietax ah! Thank you for the clarification there! The numbers were coming out so close, I figured it must be something with the rounding. But your explanation definitely helped! Thank you!