TurboTax 2025 is INCORRECTLY calculating Federal Tax due based on taxable income

[FlyingCat]

Please fix the following problem I uncovered in TurboTax. Details below:

Version:           2025 TurboTax Home & Business

Platform:         Apple iMac M4

Filing Status:  Married Filing Jointly (MFJ)

Issue:              Based on taxable income shown in Form 1040 line 15, TurboTax calculates an incorrect Federal Tax due (Form 1040, line 16).

Proof # 1:        If MFJ taxable income is $92,250. According to the official 2025 IRS Tax Tables found here: https://www.irs.gov/publications/p17 , the federal tax due for MFJ taxable income is $10,596.

Proof # 2:        According the 2025 IRS Tax brackets found here: https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2025  and also shown at the bipartianpolicy web site: https://bipartisanpolicy.org/explainer/2025-federal-income-tax-brackets-and-other-2025-tax-rules/ , the formula to calculate federal tax due for MFJ in 12% tax bracket is:

$2,385 + 12% of (taxable income minus $23,851)

= $2,385 + 0.12*($92,250-$23,851)

= $2,385 + $8,207.88

= $10,593

However, TurboTax shows an incorrect Federal Tax due by MFJ filer (Form 1040, line 16) of $9,822.

Please fix TurboTax formula to calculate Form 1040, line 16, so it matches official formula and/or table provided by the IRS.

Thank you in advance.

[xmasbaby0]

Did you have any capital gains or qualified dividends?    A different table is used.  There is often more than one tax table used when calculating your tax due or refund.

[FlyingCat]

Thank you for your prompt reply.

To answer your question, yes, I had both long and short term capital gains as well as qualified dividends.

Can you please provide link to official IRS tax table, non TurboTax users, should use when they have capital gains and qualified dividends?

Thank you.

[VolvoGirl · Accepted solution]

There are like 7 different ways to calculate the tax.
It's very common for the tax to be less than you can figure using the IRS tables. It depends what kind of income you have.

Even though the full amount shows up in the total income on the 1040 lines 3b or 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.

Save the PDF
https://ttlc.intuit.com/community/saving/help/how-do-i-save-my-turbotax-online-return-as-a-pdf/00/26...

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. And you will need the IRS Tax Tables

IRS Qualified Dividends and Capital Gain Tax Worksheet—Line 16 on 1040 instructions page 36. And you will need the IRS Tax Tables starting on page 64 or the Tax Computation Worksheet on page 76.

https://www.irs.gov/pub/irs-pdf/i1040gi.pdf

[FlyingCat]

Got it. Thank you very much for your detailed explanation and for pointing me to the Capital Gains and Dividends worksheet. It makes perfect sense.

Regards.