tax seeems wrong

[Chamonix767]

finished 2020 individual return. filing single. Taxable income is 25,224. Turbo shows 413 tax. IRS tax table shows 2,830 tax. Cant figure out why. All entries checked from scratch. TT updated with each use. Help please.

[KathrynG3]

Check box 2 of Form W-2 for how much you have already paid in taxes throughout the year. It would appear that you may have already paid in $2,830 - $413 = $2,417 in tax. 

For more information, see: How do I import or enter my W-2?

[rjs]

Is $413 the tax on Form 1040 line 16, or is that the amount that you owe? From $413 to $2,830 is a big discrepancy. Make sure you are looking at the taxable income on Form 1040 line 15 and the tax on line 16. The tax on line 16 is what's calculated based on your taxable income on line 15. Various credits further down on Form 1040 could reduce your total tax on line 24, or reduce the amount you owe on line 37.

If your tax on line 16 in TurboTax does not agree with the amount from the tax table, you probably have to use a different method to calculate the tax. The tax table is only one of seven different methods that can be used to calculate your tax, depending on what is in your tax return. Your tax return might require one of the other methods. The most common reason that you cannot use the tax table is that you have qualified dividends or long-term capital gains.

In the IRS instructions for Form 1040, look at the instructions for line 16. Starting at the bottom of the right column on page 31 it explains the seven methods that can be used to calculate the tax on line 16.

The Tax Smart Worksheet in TurboTax has 7 checkboxes that show you which method TurboTax used. Since you are using the CD/Download TurboTax software, you can see the Tax Smart Worksheet in forms mode. It's between lines 15 and 16 of the Form 1040 or Form 1040-SR Worksheet.

[Sparty_bob]

I ran into the same issue and was on the phone with TurboTax for a while trying to figure this out.  TurboTax was correct.

I had capital gains that were taxed at 15%, while my tax rate was 22%  this different tax rate on a small portion of my income made just a slight difference in the amount of taxes owed.

Something I figured out was where all of the numbers come from when looking at my return.

If I go to my forms list, and then highlight line 16, it gives a spyglass to go to supporting form. On my Tax Smart Worksheet, I could right click on the Tax amount and select Data Source.  From there I could see that number listed next to Schedule D Tax Worksheet Line 47, and by clicking there I could see the TurboTax number on line 45, and the Tax Table Calculation on line 46.  Line 47 is the lesser of the 2 numbers, and is used to calculate the taxes owed.

This is a bit long-winded, but I hope that it will help someone out.  I delayed filing taxes for 2 weeks, because this bothered me, and I couldn't figure out why the numbers were not what I thought they should be.

Net result is that TurboTax saved me money, about $200, that I never would have found if done by hand.