Turbo tax calculating taxes wrongly

[pradyiitm]

My taxable Income is $366,673, TurboTax calculates the tax to be $76,170

However, my calculation using Tax-table (different methods) all point to $74086. This is the same exact number shown by other online calculators.

Why is turbotax is showing wrong number?

Moreover, it doesn't show how it calculated and we have to pay first to see the Tax-form filled-up. Why should I pay before knowing if it's calculating correctly? It's ridiculous that they make such mistake and not allow us to check mistake before paying.

Also, there is mistake in the taxes paid, it adds extra $1761 on top of actual total taxes paid of $75039. Again we can't see the details how it invents this error without paying upfront. Ridiculous experience.

Which other software can we use to file-tax?

[baldietax]

I've not tried TT online but you may be better off in the download version of TT where you can certainly see all the forms and worksheets etc before filing/paying anything (but you have to pay for the software but they have a 60 day refund policy).  Been using it for 20 years and never had any issue with the calculations.

You can buy the download version direct from TT or certain retailers, recommend the latter as there are some good discounts at places like Amazon right now.

https://ttlc.intuit.com/turbotax-support/en-us/help-article/intuit-product-orders/obtain-authentic-t...

Direct TT pricing and download page

https://turbotax.intuit.com/personal-taxes/cd-download/

There are some system requirements however so be sure to check

https://turbotax.intuit.com/personal-taxes/cd-download/tta-system-requirements/

[SteamTrain]

Could be the extra Medicare tax, or if you have some Self-Employment income, could be the added Self Employment tax.

Yeah, the suggestion to use Desktop software instead of the "Online" software, on a full Windows or MAC computer does let you see the calculation forms at any time (Windows has much better operation/fewer bugs).

BUT

You can also see all the forms, including the tax calculations, with the "Online" software, by going to the Print Center and downloading a copy of your tax file as a PDF...but you need to get the copy with all forms and worksheets, since the file-only copy is just the filing sheets.   Of course, you have to pay for the software you are using before you can get that PDF.

[pradyiitm]

The taxable income calculations are as expected (no question of them having extra income added). Just the TAX calculated is OFF by ~$2000 from the number it should be based on the 2024 tax slabs. 
It says blended-tax-rate of 20.8% where as it should have been 20.2%. So there is some problem with the tax-rate used to calculate. I don't think the IRS tax-calculation methods have any ambiguity.

I can't pay them to see the form or Tax calculations before I know if their calculations are correct (they have no-refund policy.. even if there is a mistake your money is gone). Have to use some other tax-software unfortunately.

[DoninGA]

@pradyiitm Seen your posts and need to ask the type of income you entered to arrive at the taxable amount on the Form 1040 Line 15.

Did you enter any qualified dividends or capital gains on your return?

[VolvoGirl]

@pradyiitm      If your taxable income is right on 1040 line 15, check the tax on line 16. Then there may be some other added tax on line 23 from Schedule 2.   Especially the extra Medicare tax for high incomes.

Before filing you can preview the 1040 or print the whole return
https://ttlc.intuit.com/community/accessing/help/how-do-i-preview-my-turbotax-online-return-before-f...

See this post he was able to see the Medicare tax
https://ttlc.intuit.com/community/taxes/discussion/incorrect-calculated-income-tax-2024/00/3433293

[pradyiitm]

there is a small qualified dividend. However, the qualified dividend should only reduce my tax  and not increase

[pradyiitm]

Extra Medicare tax...this could be it.. thanks

[DoninGA]

---

@pradyiitm wrote:

there is a small qualified dividend. However, the qualified dividend should only reduce my tax  and not increase

---

Since you have a qualified dividend then the program will use the Qualified Dividends and Capital Gains Worksheet to calculate your taxes.

IRS QD&CG Worksheet in the Form1040 instructions page 36 - https://www.irs.gov/pub/irs-pdf/i1040gi.pdf#page=36

Also, look at your Schedule 2 Line 3 and Line 21 for additional taxes

[pradyiitm]

Extra Medicare tax didn't makeup for the error

Extra Medicare tax on the extra interest income I added had to be just $573 (1.45%+0.9%). 

Extra Medicare tax  I need to pay --> $123 based on the medicare-tax withheld already (~1.9% was withheld)

But the tax-calculation from TT shows ~$2000 more than tax-rate calculation.

[VolvoGirl]

Did you make any IRA contributions or get any 1099R forms for a RMD distribution if you are 72 or older?  You could have an excess accumulation penalty.   

[baldietax]

or estimated tax penalty if the $76k at issue is the outcome of line 37 and what is due to the IRS, not line 16

desktop calculates line 16 fine for the $74k and I am sure online does too

frankly the best way to resolve this is for @pradyiitm to pay for the software in some form either online or desktop as needed to see the details and understand the return or fix the data.  It's extremely unlikely to be a calculation error in TT it's going to be the data it's been given for the return.

[mesquitebean · Accepted solution]

@ pradyiitm 

Do you happen to have any foreign earned income and used the Foreign Earned Income Exclusion?   That can increase the tax on the non-excluded income.  

TurboTax often uses other tax calculation worksheets aside from or in addition to the Tax Tables, depending on the circumstances in the return.   Here's how to check:

If you are using Online TurboTax, here's how to look at your Form 1040 prior to paying, where you can also see a box as to what method(s) TurboTax is using to calculate your tax.

With your online return open, go to the left menu column and click on TAX TOOLS, then TOOLS.

In the Tools window, choose VIEW TAX SUMMARY.

When at the Tax Summary screen, go back to the left menu column and choose PREVIEW FORM 1040.

While previewing the Form 1040, scroll down to Line 15.

Just below Line 15 is a Tax Smart Worksheet that shows the methods TurboTax has used to calculate the tax.

[pradyiitm]

VIEW TAX SUMMARY --> helped a bit. But not fully. It says extra taxes of ~$2K. That's all. They should have had a better description for tax-liability

I found out from another tax software that I need to pay extra  NIIT Tax of 3.8% on net investment income.

The $76K of tax-liability quoted by TT  included $1300 of additional medicare tax and $927 of NIIT.

The regular medicare tax of $7K is put in a separate bucket. and additional Medicare-tax is clubbed with the fedral tax liability. This makes it unnecessarily complicated.

Thanks to another TAX-SOFTWARE, everything clarified (also previews every new form at every step). Wish TT had proper explanation (especially since they charge 10x more than the other software).