I received an outstanding service award (cash) from a foundation associated with my employer. The foundation issued a 1099-MISC for the $2500. When I enter that into TT Premier as "other income" it shows up properly on line 21 of the 1040. My question is how TT calculates taxes on the $2500. After entering the $2500 TT says I owe an additional $625 if federal taxes and $200 in state taxes. That is 33% of the award.
1. Is that right?
2. Where in "forms" view can I see the calculations of the taxes?
It looks like you're using TurboTax Desktop, so you can access all the forms and worksheets in your return. However, taxes are not calculated as individual components, rather taxable income is determined and then the tax rates applied by the program to that amount depending upon filing status. If you have capital gains, an alternative calculation is done on one of those worksheets so that your long term capital gains aren't taxed as ordinary income.
Based on the numbers you provided me, your marginal tax rate for federal tax is 25% and your state tax rate is 8%. Click on the following link to see the tax brackets. https://www.irs.com/articles/2016-federal-tax-rates-personal-exemptions-and-standard-deductions Your filing status and taxable income should show you in the 25% bracket. I'm going to guess you are filing a California state tax return.
I hope this helped!