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This is possible if you have credits such as the Child Tax Credit, Earned Income Tax Credit, education credit, or any of the other many credits reported on Schedule 3 available to you.
I reviewed my printed Federal and State Tax forms as well as my input into Turbo Tax. I qualify for the standard deduction and I do not qualify for any of the credits you referenced (nor did I input data for credits or were forms printed out). My income comes from a Partnership Schedule K and it appears that my income is computed correctly for Federal and State purposes.
My Federal Return computes an AGI of $34,450 and no Federal Income Tax due. However, my State Return uses my Federal data and appears to calculate a state tax obligation.
What am I doing wrong?
Think I figured it out .... it is the composition of my income that drives the answer.
MY AGI was $46,865. Of this, $38,555 was Long-term Capital Gains. I believe my income level falls below threshold for taxing my Long-term Capital Gains. They are then excluded from the tax calculation.
What is confusing is that Form 1040 Shows my taxable income as $34,470. Yet, it would appear that the number used to compute my tax due is much lower that that after adjusting out the Long-term Capital Gains.
Can you confirm my thoughts as to what has happened?
Yes that is correct. There is a worksheet called the Qualified Dividend and Capital Gain Worksheet (Qual Div/Cap Gn) that provides the calculation. It does not show clearly on the 1040.
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