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New Member
posted Feb 19, 2020 6:49:46 AM

Turbo tax is using a blended rate of 9.3% to calculate my tax liability, resulting in a lower tax due than I calculated using the tax tables. Why is that?

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4 Replies
Expert Alumni
Feb 19, 2020 7:47:36 AM

There can be a number of reasons for this.  The most frequent reason is that there are items in the tax return that have some preferential tax rates such as capital gains that are included in the overall taxable income.  If you can provide a little more information (perhaps using some hypothetical numbers), we may be able to offer a bit more insight.  

New Member
Feb 19, 2020 10:23:14 AM

Thanks Susan. It’s a super simple return. Wages, interest, ordinary dividends less standard deduction. Using the tables I calculated the tax due at $1516. Turbo tax is calculating tax due as $1321. Not sure if it’s a coincidence but it’s like they’re subtracting the ordinary dividends before the calculation, even though the return shows the correct taxable income. ($14249)

Level 3
Feb 19, 2020 10:29:20 AM

Are your dividends 'qualified'? If so, it's using the Qualified Dividends and Capital Gains Tax Worksheet to calculate your tax owed.

New Member
Feb 19, 2020 10:47:05 AM

That explains it. Thanks so much!