Turbo tax not calculating tax correctly from 1040 Line 15. The calculated Tax on 16 is not correct according to the Tax Tables.

[VolvoGirl]

There are like 7 different ways to calculate the tax.

It depends what kind of income you have. Even though the full amount shows up in the total income on the 1040 line 7, if you have capital gains or qualified dividends the tax is not taken from the tax table but is calculated separately from Schedule D. The tax will be calculated on the Qualified Dividends and Capital Gain Tax Worksheet. It does not get filed with your return. In the online version you need to save your return as a pdf file and include all the worksheets to see it.

For the Desktop version you can switch to Forms Mode and open the worksheet to see it. Click Forms in the upper right (upper left for Mac) and look through the list and open the Qualified Dividends and Capital Gain Tax Worksheet.

[dastevenson19]

Line 15 Taxable Income = $36418

Line 16 Tax = $7912

The tax tables for a single filer says the tax should be $4172

Looks like the error in Turbo Tax is $3740.

Any thoughts?

[VolvoGirl]

Are you a dependent?  Some of your income is taxed at your parent's rate.  See if any boxes on line 116 are checked like from form 8814  or 4972.    4972 is for  lump-sum distributions from qualified retirement plans like a 401(k). 

[dastevenson19]

Thanks for the reply. It's my daughter's return. The 8814 and 4972 boxes are not checked on Line 16. She had about $1000 in W2 wages, $30000 Inherited IRA withdrawal for college, $5800 Capital Gains, $1300 Dividends. Is there a form that would show how the tax was calculated (if it wasn't from the tax tables)?

[VolvoGirl]

Check out the Qualified Dividends and Capital Gain Tax Worksheet as I said above.   And see if there is a form 8814  or 4972 in the return.  Are you using the Online version or the Desktop program?  

[dastevenson19]

Thanks again for the reply. Desktop version. Form 8814 wasn't generated for her. Form 4972-T and 4972-S have a couple of zeros in them. The QD & CGT Worksheet has the correct tax from the table on Line 24. Line 23 has $3416. As a result Line 25 has $3416 (Tax on all Taxable income). Wouldn't $3416 be the correct entry on 1040 Line 16?

[JamesG1]

The Qualified Dividends and Capital Gain Tax Worksheet will use the smaller of line 23 or line 23 and report it on line 16 of the 2021 Federal 1040 tax return.  The form can be viewed here at page 36.

The worksheet can be viewed at Tax Tools / Print Center / Print, save or preview this year’s return / Include government and TurboTax worksheets.

Is that what you are seeing?

[dastevenson19]

Thanks for the reply. Here is what I am seeing:

Qualified Dividends and Capital Gain Tax Worksheet:

Line 23   $3416

Line 24   $4172 (from Tax Table)

Line 25   $3416 (smaller of Line 23 and Line 24)

Form 1040:

Line 16   $7912 (this should match Line 25 above and doesn't)

Any insight to why this is occurring would be welcome.

[AnnetteB6]

Since you are using the Desktop version of the program, you can use Forms mode to dig deeper into where the number on line 16 originates.  

Click Forms in the upper right corner and go to Form 1040 line 16.  If you hover over the amount and right-click the mouse, there will be a magnifying glass to the left of the number.  Click the magnifying glass and it will take you to the worksheet or form where the number was calculated.

@dastevenson19