tax calculation incorrect?

Forum|Forum|5 years ago
February 2, 2021
2 replies
11 views

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.

Best answer by Opus 17

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.

Opus 17

Answer

Level 15

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

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

Level 15

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.

VolvoGirl

Level 15

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

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

DawnC

Level 15

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.

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