Tax Bracket Calculation

rhearst1 · ‎February 8, 2020

Last year my taxable income was $349,662 and Turbo Tax calculated my tax to be $77,361 (~22%). This year my taxable income is $205,864 and Turbo Tax is calculating my tax to be ($66,077) (~32%). Fed Tax Bracket should be ~24%. My situation is very similar to last year with less income. Any ideas what I might be doing wrong or is TT correct?

KathrynG3 · ‎February 8, 2020

It depends on how the income was entered. Since you were expecting a similar outcome, I recommend starting with the basics.

Going back to Wages & Income: From the left menu>Federal>Wages & Income
1. Checking the entries that they are entered EXACTLY as received
Other details to check would be under My Info for filing status and entries for any dependents.
1. There are certain thresholds to meet in order to claim a qualifying child or qualifying relative and these standards are described in this article Who can I claim as a dependent? In case it is useful for your review, I am including it.
2. Children under 17 years old are eligible for a credit of $2,000. This article explains What is a Child Tax Credit with a video. You did receive the full credit for each of the younger children.
3. Secondly, for the 18 years old, Haley, she is eligible for the Family Tax Credit until she turns 19. If she remains in school as a full-time student, you could receive this credit until she turns 24 years old.
Is there any chance there were any carryovers? Did taking the standard or itemized deductions change from last year? Were dates for any home mortgage entered - with the limits to mortgage interest expense changing after December 16, 2017, the dates indicate an important classification.

For 2020, I do recommend using this IRS Tax Withholding Estimator so you can get a very clear idea of what you will owe federally. You can contact your State Department of Revenue, for their estimated tax withholding recommendations.

These are the tax brackets for 2019 and for 2020