Why does correcting cost basis on stock trades covered on W2 not reduce federal tax?

[sjg1]

I get a 1099-B covering RSU's sold to pay tax - the income is ported on W2, so until I correct the cost basis my federal tax is incorrect.  In past years when I correct the cost basis Turbo Tax reduces Fed tax owed, but not this year.  State tax was reduced but Fed tax was unaffected.  Bug?

[ThomasM125]

One possibility is that you have more than $3,000 in net capital losses. You can only deduct a net capital loss of up to $3,000 each year against ordinary income. So if you have more than $3,000 in un-deducted net capital losses, a reduction in your capital gain income may not generate a reportable reduction in your capital gains. If this were the case, you would look on line 7 of your Form 1040 and see -$3,000 for your capital loss deduction.  

To view your form 1040 and schedule 1 to 3:

1. Choose Tax Tools from your left menu bar in TurboTax Online
2. Choose Tools
3. Choose View Tax Summary
4. See the Preview my 1040 option in the left menu bar and click on it
5. Choose the Back option in the left menu bar when you are done 

There may be a different treatment of capital gains on your state tax return, so that may be why your state tax changes but not the federal.

It is also possible that your capital gains are not taxable on your federal tax return because of the amount of your federal taxable income. If your taxable income is under $44,625 for a single filer or $89,250 for a married-filing joint filer, your capital gains are not taxed on your federal tax return in 2023.