TAXABLE INCOME

[DECI]

MY TAXABLE INCOME (LINE 15 ON 1040SR) FOR MARRIED FILING JOINTLY IS 62,000.00 AND THE TAX  (LINE 16) FOR THAT INCOME IS $1,093.  HOW CAN THAT BE? ACCORDING TO THE TAX CHART IT SHOULD BE $7045.00

[VolvoGirl]

It depends on what kind of income you have.  There are like 7 different ways to figure the tax.

See the IRS worksheet on 1040 page 36 for how the tax is figured.  Turbo Tax uses the same worksheet.

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

If you have capital gains or qualified dividends the tax is not taken from the tax table but is calculated separately from schedule D.  The tax will be calculated on the Qualified Dividends and Capital Gain Tax Worksheet.  It does not get filed with your return.

In the online version you need to save your return as a pdf file and include all worksheets to see it.

For the Desktop version you can switch to Forms Mode and open the worksheet to see it.  Click Forms in the upper right (upper left for Mac) and look through the list and open the Qualified Dividends and Capital Gain Tax Worksheet.

[FangxiaL]

If you have investment income, especially qualified dividends and long-term capital gains, they are not taxed at the ordinary income tax rate. That may explain why your tax liability is lower than what the tax table shows.

[rjs]

When you say "tax chart" I assume you mean the tax table in the IRS instructions for Form 1040. The tax table is only one of the seven different methods that can be used to calculate your tax, depending on what is in your tax return. Your tax return probably requires using one of the other methods. The most common reason that you cannot use the tax table is that your income includes qualified dividends or long-term capital gains, which are taxed at lower rates.

You didn't say what your income consists of. For married filing jointly with taxable income of less than $80,800, any qualified dividends and long-term capital gains that you have will be taxed at 0%. In other words, you do not actually pay any tax on that portion of your "taxable" income. If a large part of your income is qualified dividends and long-term capital gains, that could explain why your tax is so low.

In the IRS instructions for Form 1040, look at the instructions for line 16. Starting at the bottom of the right column on page 32 it explains the seven methods that can be used to calculate the tax on line 16.

If you are using the CD/download TurboTax software you can see which method TurboTax used by looking at the 7 checkboxes in the Tax Smart Worksheet. 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.

[DHamF]

Thank you. That explains it all. Much appreciated.

[DHamF]

Thank you all for your timely and accurate information.   Your answers explained it all. I really appreciate  it. Thank you