tax calculation incorrect?

[Henry400]

Can a $1.69 entry from a 1099-INT change my tax obligation by $6.00?  I think there is something messed up with the software, as I cannot think of any circumstance where an additional dollar and change could increase my taxes by 6 dollars.  Pleas help.

[Opus 17 · Accepted solution]

Unfortunately, it is probably correct. If you look at the actual tax table in the instructions for form 1040, such as on page 68 of this PDF, you will see that this can happen.

https://www.irs.gov/pub/irs-pdf/i1040gi.pdf

The tax table goes in increments of $50, so that if you are single and your taxable income is anywhere between $20,000 and $20,050, your tax will be $2206. As soon as your income tips over $20,050.01, your tax becomes $2212 and remains $2212 until your income hits $20,100.  Without the interest income, your taxable income must be right at the very top of one of those $50 increments on the tax table, so that the interest pushes it over into the next level of the table.

Unfortunately, TurboTax can’t calculate an exact tax based on  percentages because it must use the forms and instructions approved by the IRS which include the tax table.

[VolvoGirl]

Yep!  It happened to me one year.  I once added $6 in interest and the tax went up $12! It pushed me into the next tax bracket. I was right at the line.

[DawnC]

Yes, it can.  If that dollar bumped you into the next income range, it could affect the amount of multiple credits and deductions on your tax return.   Many deductions and credits are phased in and out based on $25 ranges of your total income.  So, it is not only possible, but not that uncommon to see what you are seeing.   The $1 of income could have caused your to move to a different income range and also lowered one or more of the credits you are receiving.

[VolvoGirl]

Quick link to get the tax table without the whole 1040 Instructions 

https://www.irs.gov/pub/irs-pdf/i1040tt.pdf 

[chip65]

Something similar is happening to me.

As an aside TurboTax makes it virtually impossible to send a question to Tech Support and their phone reps are useless.

Here's the situation in TurboTax Deluxe 2021 (desktop). I have interest from cashing US Savings Bonds. I have the 1099-INT and entered the amount manually and answered the questions that  followed. Then the software counted that amount twice - doubled my actual interest. Makes a big difference in tax due and I can not correct it. This needs to go to Tech Support and programmers which I can't do.

Beware

[VolvoGirl]

Did you enter it in both boxes 1 and 3?  Only goes in box 3.   Did you import any 1099 forms?  It might have imported that one and you also manually entered it.

If you have the Desktop program switch to Forms and look for a Duplicate 1099 for it or open Schedule B and see if it's there twice.

[JulieS]

@chip65 I just checked this out and the amount only counted once for me. @VolvoGirl is right, you should switch to Forms mode by clicking on the white Forms icon in the upper right corner.

Check your Schedule B first by highlighting it on the left. See if there is more than one entry for this 1099-INT.

Next check the Form 1099-INT for this entry. If this is savings bond interest, it should be in box 3 only, and box 1 should be blank. You can edit these boxes directly in this form without causing any errors.

See example below.

[chip65]

My thanks and my apology for not responding sooner.

This did fix my problem. I guess I put the interest in Box 1 before clicking the box asking if I had others. So the interest showed in both 1 and 3. I was able to edit the as you suggested.

Good help,

Chip65