The tax reported on 1040 Ln 16 does not with IRS Pub 17 Tax Tables.

[1stETQ2day]

The tax due calculated by the program and reported on 1040 Ln16, is about 1/2 the amount in the IRS tax tables in Pub 17 for the amount of taxable income the program reports  on 1040 ln 15.  I couldn't find anything to explain how the program arrives at the tax amount it reports. 

I am using Premier loaded from a CD.  I check for updates each time I open the program.

[DawnC · Accepted solution]

The tax table you are looking at is for ordinary income only.  Some income is taxed at different rates (Qualified Dividends/Long-Term Capital Gains are taxed at a lower rate than ordinary income).  If you have any of the following included in your return, the tax table doesn't give you accurate results:  

• Qualified Dividends and Capital Gain Tax Worksheet
• Schedule D Tax Worksheet
• Schedule J
• Form 8615
• Foreign Earned Income Tax Worksheet
• There is a list of other possibilities on the Tax-Smart worksheet, see below.  

You can see how TurboTax calculated your tax number by looking at the Form 1040 Worksheet (Wks).   About half-way down, you will see Tax-Smart Worksheet, and it will list what components and worksheets were factored into your tax figure calculation.  

[1stETQ2day]

Thanks for the reply but it is not relevant. The taxable income reported  by Turbo Tax on 1040 ln 15 is the entry point point for the IRS tables and takes into account all items you mention.  My return is rather simple, pension, interest, dividends, and capital gains.

[DawnC]

No, the amount on Line 15 represents all of your taxable income.  But all income is not taxed the same.  Your ordinary income that is included on Line 15 uses the tax table.  But capital gains and qualified dividends taxes are calculated separately - this income is not taxed as ordinary income (which uses the tax tables).   If you look at the Tax-Smart Worksheet (part of Form 1040 Wks), you will see a breakdown of how the tax on Line 16 was calculated.   Line A1 from the Tax-Smart Worksheet is the amount of tax from the ordinary income tax tables.  Line 4 shows your tax on dividends and capital gains.  There is also a worksheet included in your return that shows the details of this calculation.    Regarding your capital gains:

The tax rate you pay in 2020 depends on whether your gain is short-term or long-term.

• Short-term profits are taxed at your maximum tax rate, just like your salary, up to 37% and could even be subject to the additional 3.8% Medicare surtax, depending on your income level.
• Long-term gains are treated much better. Long-term gains are taxed at 15% or 20% except for taxpayers in the 10% or 15% bracket. For low-bracket taxpayers, the long-term capital gains rate is 0%. There are exceptions, of course, since this is tax law.
• Long-term gains on collectibles—such as stamps, antiques, and coins—are taxed at 28%, unless you're in the 10% or 15 % or 25% bracket, in which case the 10% or 15% rate or 25% rate applies
• Gains on real estate that are attributable to depreciation—since depreciation deductions reduce your cost basis, they also increase your profit dollar for dollar—are taxed at 25%, unless you're in the 10% or 15% bracket.
• Long-term gains from stock sales by children under age 19—under age 24 if they are students—may not qualify for the 0% rate because of the Kiddie Tax rules. (When these rules apply, the child’s gains may be taxed at the parents’ higher rates.)

[RMat]

Not sure if this helps but I was stumped by same thing.  In doing my father's tax return I saw zero tax on line 16 even with a capital gain in addition to his social security.    Low bracket income folks pay zero capital gains rate (not 15%). 

[Irene2805]

TurboTax calculates your tax based your taxable income.  It uses the method specified by the IRS for the type of income you have.

To see how your tax is calculated you can look at the Form 1040 or Form 1040-SR Worksheet.  

TurboTax CD/Download

1. Go into Forms Mode by clicking on the Forms icon in the top right of the blue bar. 
2. In the Forms in My Return list on the left, click 1040/1040SR Wks to open it.
3. Scroll down to the Tax Smart Worksheet (just below line 15).
4. You will see an X on the line indicating which method was used to calculate your tax.
5. On line 16, right-click on the amount of tax and click Data Source.
6. On the next screen it will show you the form and line used to calculate the tax.
7. To return to the interview, click on the Step-By-Step icon in the top right of the blue bar.  

TurboTax Online

1. While in your return, click Tax Tools > Tools  (in the black bar at the side of the screen).
2. In the Tools Center, under Other helpful links click on View Tax Summary. 
3. Click on the Preview my 1040 link in the black bar at the side of the screen.
4. The 1040/1040SR Wks will display.
   Scroll down to the Tax Smart Worksheet (just below line 15).
5. You will see an X on the line indicating which method was used to calculate your tax.  [See screenshot below.]