TurboTax uses my ordinary dividends to calculate my taxable income instead the correct qualified dividends. ( It uses 3b-ordinary instead of 3a-qualified

[ThomasM125]

It may be that your income is over $47,025 (single filer) or $94,050 (joint filer), in which case qualified dividends would begin to be taxed at similar rates to ordinary dividends, which are taxed at ordinary tax rates.

On the Qualified and Capital Gains worksheet, you will see the qualified dividends listed on line 2 being added to the capital gains on line 3 and later on line 16 the difference between those numbers and the income threshold being used to apply the 15% tax rate (on line 18) to arrive at the portion of your capital gains and qualified dividends that are being taxed. The amount below the threshold therefore are not being taxed, so your qualified dividends are getting the preferential capital gain tax rates.

[Edited 4/10/25 at 5:01 PM PST]

@ladyswg 

[ladyswg]

Then, what amount should be used since the ordinary dividend amounts are different than the qualified dividend amounts.

[mesquitebean]

@ladyswg 

You appear to be using the desktop version.   If so, you can go into Forms Mode and see the calculation TurboTax used on the Qualified Dividends and Capital Gains Tax Worksheet.    In Forms Mode when you look at the list of forms in the left column, that worksheet is likely abbreviated as qual div/cap gain (or similar.)

[ladyswg]

Thank you for your reply. 

I checked the TurboTax worksheet as you indicated in the Form section for Dividend and Capital gain . However, it didn't show why the qualified dividends were not used for the taxable income calculation. The worksheet started the total taxable income as the Ordinary dividends was in the calculation, not the qualified dividends. In addition, you also pinpointed that in order to qualify for the 15% qualified dividend tax rate, the taxable income for MFJ must be less than 94,050. Actually I found it is 94050 to 583,750. Am I right? Please help!

[mesquitebean]

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@ ladyswg wrote:

Thank you for your reply. 

I checked the TurboTax worksheet as you indicated in the Form section for Dividend and Capital gain . However, it didn't show why the qualified dividends were not used for the taxable income calculation. The worksheet started the total taxable income as the Ordinary dividends was in the calculation, not the qualified dividends. In addition, you also pinpointed that in order to qualify for the 15% qualified dividend tax rate, the taxable income for MFJ must be less than 94,050. Actually I found it is 94050 to 583,750. Am I right? Please help!

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@ ladyswg 

Two different people provided comments above, and you responded as though it was one person.   That was not my comment in the first response above about the QDCG tax rate.    All I did was  tell you how to look at your QDCGT Worksheet.    The figure at the top of the QDCGT Worksheet comes from the Form 1040, Line 15 "Taxable Income."    That Form 1040, Line 15 amount is derived from the figures in the far right column of page 1 of the Form 1040.    It does start off that way, but it accounts for the qualified dividends as that worksheet continues.

       Specifically, Line 2 of the QDCGT Worksheet is the qualified dividends amount from the Form 1040, Line 3a.  They are then subtracted out (along with capital gains, if applicable) in the next step as that worksheet continues.  The amount after subtraction is on Line 5 of that worksheet.

I just searched and found a pretty good recent Forbes article that has the Qualified Dividend Tax Rates for 2024.   In the article linked below, scroll down the page about half way, and you'll see a table showing the brackets for the 0%, 15%, and 20% levels.  From that article it looks like they are taxed at 15% for MFJ $94,051 - $583,750.

How Are Dividends Taxed? Understanding Qualified And Ordinary Tax Rates

https://www.forbes.com/sites/investor-hub/article/how-are-dividends-taxed/

I'm a fellow user, not a tax expert, so I'll try to get TurboTax Expert @ThomasM125 to return to the thread to further comment on QDCG tax brackets and rates, but it depends on when he's in the forum.   Or it's possible one of the other forum experts will see the thread, too.

[ladyswg]

Thank you so much for your explanation. My MFJ taxable income is far less than the $94,051 - $583,750, but TurboTax uses ordinary dividends as the total taxable income. I don't understand why? Is anyone can help? 

[ladyswg]

I hope it is what you said in my 1040. The total of Capital gain is calculated at 15%. but the Dividends were used with the total of ordinary rate. 

[mesquitebean]

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@ladyswg wrote:

I hope it is what you said in my 1040. The total of Capital gain is calculated at 15%. but the Dividends were used with the total of ordinary rate. 

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 I don't know where you're seeing that, and that's the drawback of a public forum like this.  No one in the forum can see your return, so I can't comment specifically, but only in general.   As mentioned previously, I'm a fellow user--not a tax expert.   I've tried to bring one back into the conversation, but so far it hasn't worked.     It's difficult to understand each other on a bulletin board forum like this.   I'm not sure I'm understanding your concern and what you are experiencing, or even if we are talking about the same thing.    I'll tell you below how you can phone TurboTax Support.   It might be easier if you speak to someone in real time for a back and forth.

But in general, this is my understanding of how it works.   If I understand your original question correctly (at the top of this thread), you are wondering why your 1040, Line 15 (taxable income) used the Line 3b (ordinary dividends) amount instead of Line 3a (qualified dividends).  That's what Line 15 is supposed to do.  Look at the instructions printed on the Form 1040 for Line 9 (total income), which says to use the Line 3b amount when adding up the right column of the Form 1040.    Even though the qualified dividends are displayed on the Form 1040, Page 1, they are not used there; i.e., they are not taken into account on Page 1 of the Form 1040.   The qualified dividends are not considered until the QDCGT Worksheet.  It is on that QDCGT worksheet where the qualified dividends are taken into account and given preferential tax treatment if they qualify there.

That's my understanding of how it works in general.  I can't address specifically what you are experiencing, if it differs from that.

Here's how you can phone TurboTax Support.  It might be easier and more efficient to discuss your concern with them in a realtime conversation.

Support hours are 5AM-9PM Pacific, every day this time of year.

FAQ: What is the TurboTax phone number?
https://ttlc.intuit.com/community/using-turbotax/help/what-is-the-turbotax-phone-number/00/25632

@ThomasM125 

[ladyswg]

I am very sorry to confuse you and thank you for your detail explanation. Nevertheless, since you are the expert in TurboTax software, would you please direct me where I should look for line 22 and 24 " $100,000 or more use the tax computation worksheet" on the QDCG form? Thank you for your professional expertise and help!

[BrittanyS]

You can pull up the Qualified Dividend and Capital Gains worksheet by click forms in the upper right hand corner.  Enter Qualified Dividends and click search.  See screenshot below:

@ladyswg 

[mesquitebean]

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@ ladyswg wrote:

I am very sorry to confuse you and thank you for your detail explanation. Nevertheless, since you are the expert in TurboTax software, would you please direct me where I should look for line 22 and 24 " $100,000 or more use the tax computation worksheet" on the QDCG form? Thank you for your professional expertise and help!

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I don't use the term "expert" for me 🙂  It's a constant learning ordeal every year.   I'm just a fellow user volunteer that has used TurboTax for a lot of years.     The Lines 22 and 24 (for income greater than $100,000)  that you are referring to are at the bottom of the QDCGT Worksheet.   Here is an image showing the bottom of the QDCGT worksheet.

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The Tax Computation Worksheet is used "behind the scenes" in TurboTax when the income is $100,000 or more.    You can't see the actual Tax Computation Worksheet within TurboTax, but you can see it in the 2024 Form 1040 Instructions, where you can figure the calculations yourself to verify TurboTax figures.  The Tax Computation Worksheet is on Page 76 of the Instructions--right after the IRS Tax Tables.  Choose the part there for your particular filing status.

2024 IRS Form 1040 Instructions PDF

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