Why is the Total Tax amount calculated for Line 11a by TT 2018 Premier different than the value calculated by hand using IRS 2018 Tax Computation Worksheet—Line 11a.

[Anonymous]

The value for Total Tax (line 112 of Form 1040) TurboTax 2018 is entered without any backup information. It says to "see instructions."

Using the instructions in the IRA Document, 2018 Instruction 1040 TAX AND EARNED INCOME CREDIT TABLE, page15 yields a different amount than TurboTax. 

Which is correct? It would be very helpful if the software showed how the Total Tax value is calculated. If there is an error, please correct it and notify user of the error.

I am not showing the detailed calculations for privacy reasons; however I can say that the IRS value was more than $2000 higher than TurboTax's value.

[VolvoGirl · Accepted solution]

Even though the full amount shows up in the total  income on the 1040 line 6 (from Schedule 1 line 13) 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 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.

https://ttlc.intuit.com/replies/3300459

[Anonymous]

Thank you for your quick reply. I followed your instructions line-by-line and the information about which method was used to determine the tax. I went back to the "Qualified Dividends and Capital Gains Tax Worksheet." It references the "Tax Computation Worksheet." Where can I find it. It is not on the "Forms in My Return" listing?

I appreciate your assistance but wish that TurboTax had provided a more direct way to find the information.

[dmertz]

The text referring to the Tax Computation Worksheet is referring to this worksheet in IRS Pub 17.  TurboTax does the computation internally.

<a rel="nofollow" target="_blank" href="https://www.irs.gov/publications/p17#en_US_2018_publink10008635">https://www.irs.gov/publications/p1...>

[Anonymous]

Thank you for your reply. Unfortunately, when I use the Pub 17 worksheet, I get a different result. Here are my calculations:

(a) Line 10:   $238,426
(b) Multiplication amount:   0.24
(c) (a) x (b):   $57,222
(d) Subtraction amount:   $11,421

TAX (d) – (c) for line 11a:   $45,801

TurboTax’s calculated line 11a:   $43,738

Why the difference?

[dmertz]

The difference likely results from some of the taxable income on Form 1040 line 10 being taxable at the 15% long-term capital gains rate rather than as ordinary income at the 24% ordinary tax rate.  Only the portion of line 10 that is not taxed as long-term capital gains is taxed at the ordinary income tax rate on the Tax Computation Worksheet.

TurboTax's result suggests that $22,920 of the $238,426 it taxed at the 15% long-term capital gains rate and only the remaining $215,506 is taxed as calculated on the Tax Computation Worksheet:

15% * $22,920 + 24% * ($238,426 - $22,920) - $11,421 = $43,738

If this is the case, on the Qualified Dividends and Capital Gain Tax Worksheet you should see $22,920 on line 19 and $215,506 on line 7.

[Anonymous]

Thank you. I'm not sure I fully understand everything that's happening. I checked lines 7 and 19 on the worksheet and the results match your numbers.

I guess IF I had a tax accountant license I would need to surrender it! As I don't  have one, I'll just rely on TurboTax and stop looking for problems.