Thank you, sir. I think that's the answer. I was just looking at taxable income and doing the math. Forgot about the different rates for those things you mentioned,
Do you have capital gains or qualified dividends? They are taxed at a lower rate than ordinary income.
It is not obvious on the 1040, but the Tax on line 11 is not always calculated using the Tax Tables on the Taxable Income in line 10.
The most common case is when the Taxable Income on line 10 includes capital gains or qualified dividends. In this case, a separate worksheet is created that shows the ordinary income (less the capital gains and qualified dividends) taxed at the regular rates and capital gains/qualified dividends taxed at the lower capital gains rate. These two tax results are then added together and placed in line 11.
Thus, the Tax seen on line 11 will not appear to match a simple tax calculation on the whole Taxable Income amount in line 10.
Yes,,,that's it. I just saw the "taxable income" amount and computed the tax which was less than TT calculated, due to cap gains, etc. Good to know.
My tax obligation of $3950 on line 18 indicates a tax rate on my taxable income of 10%. My taxable income includes short term cap gains of $2650. The tax tables say my taxes should have been $4275. If STCG are taxed as ordinary income how does TT determine that my tax obligation is $324 less than what the tables say it should be? What is TT's obligation if the IRS determines that there is an error?
it may not make a difference, but use Line 15....
and please confirm you have nothing on Line 3a....that is taxed at a lower rate, so it needs to be subtracted from Line 15 first.
if it saves you any effort, if TT was incorrect, these board would 'blow up' into 1000's of posts and that is not occurring
TT's obligation is that if they make a mistake in the amount of tax your owe, they will pay interest and penalties if the source of the error is the software... if you make a data entry error that causes the error, they will not be responsible for that.. Note they are not liable for the tax due in any circumstance, but will take responsibility for penalties and interest if the software made a calculation error and the data entry was correct.
There is $37 on 3a which is negligible IMO. I understand too that if there was an error in the TT software that the boards would be blowing up. Still I do not understand how there can be such a large difference [$324] between what that tax table says is the tax on the amount on line 15 and what TT determines is the tax due on the amount on line 15; regardless of how one arrived at the amount on line 15.
The IRS accepted the TT amount for tax due, but I expect that they would also have accepted the tax tables amount as well. My understanding is that they don't get around to matching returns with W-2s or 1099s until some time this summer so per my old tax advisor I'll just sit tight and and see what, if any, response they provide.
just so we are on the same page;
Line 16 is from the tax table and it is looking up the amount on Line 15 LESS Line 3a and less whatever is on line 7 that is long term capital gains.
also, what is your filing status, are you looking in the correct column?
if you want to post lines 1-15, I will review and explain what is occurring.
Married filing jointly. line 7 is all STCG NO LTCG
line 8 is K-1 income from a trust.
Here is the info direct from the copy TT provided.
please look on Schedule D, lines 7 and 15.... please reconfirm where that $2649 appears....I suspect it is on line 15 (long term), but you stated earlier in this thread that it was short-term (line 7)
Here is your Sched D which put an entry into the LTCG section. I know that I had no LTCG. Also I believe that TT had access to both 1099-Bs.
Here is my sched D where I combined everything into the STCG section. I had never done TT using these forms before so I had no clue what to expect.
The way I filled out my sched D is the same way that my tax advisor would have done it with his tax software had he efiled for me this year. Sp possibly the tax figured is correct for the way it was submitted, but I don't know why TT figured in LTCG.
So can you find where the $3731 Capital Gains Distribution comes from? Check all your 1099Div, 1099B, and K-1. Might also be on a 1099R.
@BAJJERFAN - go back to the original brokerage house documents and look at the long term section,
the short term losses are netted against the long term gain and the way your taxes were calculated - rightly or wrongly - is that the capital gains is long term.
What dates did you provide to TT when you entered the data? it should be very obvious from the brokerage account statement what is long term and what is short term.
You also mentioned a Trust and a that means a K-1. what was on that document that could have mapped over to the Long term and Short term section. what is on Lines 8 and 9a of the K-1, if anything?
did you follow exactly what TT instructed you to do as you entered each document?
if the gains should have been short term and your tax return reported then as long term, that HAS TO be amended as you have underpaid your taxes, but before jumping to that conclusion, let's go back to the original source documents and determine where the short term and long term information comes from
lastly, it may be as simple as the long term capital distributions that are on 13. you didn't sell funds, but they distributed and reported that as long term distributions.
Thanks, but I know where it came from. There was a STCG of $3731 on one 1099- B and a STCL of -1082 on another 1099-B giving a net STCG of $2649.
Did you import the 1099B or manually enter them? If you imported it may have imported wrong. So you need to check it close. Or you are not understanding why the 3731 got put on line 13. Are you using the Desktop program or the Online version? Maybe delete the imported ones and enter them manually from the actual statements. Also it common for them to put out Amended 1099 forms.
The trades were all stocks so I would have likely used the first buy and last sale dates of the year.
Nothing on lines 8 and 9a of the K-1 just on line 7 which the trust attorney who did the trust tax return classified as rental income.
I believe I followed the instructions, but can't guarantee that now.
I will try later to get more info from the 1099s.
what does that mean you used the first buy dates and the last sell dates of the year? the requirement is is to use the actual purchase and and the actual sale date. for anything purchased in the last 10 years, it would be right on the statement as a "covered transaction".
But I really believe the long term capital gain distribution on line 13 (first screen shot) and line 4 (2nd screen shot) is the issue - you can't just be moving things around..... What do your source documents state?
I believe that I imported the 1099-B by inputting the brokerage EIN or whatever it asked for, but apparently only one 1099-B was imported into the form 8949. No I do not understand why the 3731 ended up on line 13 since I had no long term cap gains. I was using the online version. There were no amended 1099s.
Here is the summation of the two 1099s. As can be seen neither shows any LTCG.
How would a taxable income of 38,900 and a LTCG of 3731 lead to a tax due reduction of $324?
This is how my tax advisor summarized all of my completed trades last year on form 8949 rather than list a slew of trades. I had planned to do the same this year, but your software wouldn't let me because it doesn't use individual IRS forms, so it's a dead issue. But you are correct in that the problem lies in the misplacement of the $3731 in short term capital gains.
There is no tax due on long term capital gains for married filing jointly with an income of $80,000 or less. So your software should have ended up ignoring any long term capital gains, correct?
https://www.bankrate.com/investing/long-term-capital-gains-tax/
The net short term capital gain of $2649 was properly included as ordinary income on line 7. All other entries on the 1040-SR are I believe correct except for the tax due which the TT software undercalculated by $324.
Also can you post here if it's not too much trouble how the TT software calculates how much of one's social security is taxable?
My tax advisor said that filing an amended return this early would confuse the IRS because they don't have all of the necessary 1099s, etc. available for matchup.
Can you post a link to your online amended 1040 form?
To see the Social Security Benefits Calculation Worksheet in Turbo Tax Online version you would have to save your return with all the worksheets to your computer. Or if you are using the Desktop CD/Download Software you can switch to Forms Mode (click Forms in the upper right) and click on SS in the list on the left side.
Is your Social Security taxable?
https://ttlc.intuit.com/community/income/help/is-my-social-security-income-taxable/00/25600
IRS Pub. 915 on Social Security