Why does turbo tax use a blended tax rate percentage instead of the progressive bracket calculations? My tax liability is off $4 and I'm not paying a penny more to Sam.

[adamz1]

I have a degree in Accounting and specialized in tax - my first job was a tax consultant. When calculating my tax liability using the 2022 brackets, it is $4 lower than Turbo Taxes calculation based on my effective tax rate. My marginal tax rate is 22% and when subtracting my agi from the standard deduction and multiplying by the 22% plus the $4807.5, I receive a tax liability $4 lower than turbo tax's calculation. Oh it's only $4? I'm not paying a dollar more to uncle Sam then I am required to do so. Of course I can't talk to a Turbo Tax professional because they want me to upgrade to deluxe even though this is a mathematical issue and not a question on my tax liability itself. Turbo Tax, how do I get technical help on your mathematical error. Multiplying by a rounded percentage point does not yield the same result as step by step arithmetic.

[rjs]

There is no mathematical error in TurboTax, and it does not use the blended tax rate to calculate your tax. The blended tax rate is just informational, to give you an idea of the overall percentage of tax that you are paying. The blended tax rate is derived from the amount of your tax. The amount of tax is not derived from the blended tax rate.

You used the Tax Rate Schedules to calculate your tax. You overlooked the "Caution" at the top of the Tax Rate Schedules, which says the following (emphasis added).

"The Tax Rate Schedules are shown so you can see the tax rate that applies to all levels of taxable income. Don't use them to figure your tax. Instead, see the instructions for line 16 [of Form 1040]."

The instructions for line 16 tell you that "If your taxable income is less than $100,000, you must use the Tax Table . . . to figure your tax." That's what TurboTax does, and if you use the Tax Table you will get the same result. The Tax Table is based on $50 increments of taxable income. All incomes in a particular $50 range have the same amount of tax, so there is a variance of a few dollars from an exact percentage.

[Amand4]

I'm having the same issue. I have a return in TurboTax that's saying the tax is $270 or 15.6% of taxable income. But the IRS tax table says $174, and TaxSlayer also says $174. Why is TurboTax not using the tax table? I'm an accountant as well. Please advise! I'd like to use TurboTax, but it's calculating federal tax using the blended rate and $100 more in taxes.

[MarilynG1]

TurboTax does use the Tax Table for incomes under 100K.  The 'blended tax rate' is just informational.

I would suggest that you compare your TurboTax return with your Tax Slayer return to look for the differences.

Here's more info on the Blended Tax Rate.

@Amand4 

[Amand4]

It's definitely not showing me a federal tax payment using the tax table. If it were, it should be showing me $174, like TaxSlayer and the IRS Tax table. It's a simple return, single filer, with one line for interest income, and a standard deduction. There's not much to check and compare. It's just not working. My guess is maybe Turbotax is not using the tax table because there's no wages. I'm about to enter some mock numbers into the wages to see what it does.