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Why is my Form 1040, line 16 amount less than the standard IRS tax table?

by TurboTax Updated 5 months ago

Your return probably contains income from sources that aren't taxed as ordinary income, such as capital gains or qualified dividends (reported on Forms 1099-B and 1099-DIV, respectively).

TurboTax uses whichever method gives you the minimum amount of tax so that you don't overpay. Therefore, your line 16 figure may differ from the IRS tax table, which only lists tax-due amounts for ordinary income.

For example, let's say you have a capital gains distribution. TurboTax uses the Qualified Dividends and Capital Gains Tax Worksheet, instead of the IRS tax table, to calculate your tax liability. This results in a lower tax amount than in the IRS tax table because capital gains are taxed at a lower rate than other types of income, such as wages or salary.

In TurboTax Desktop, you can determine which tax method the program is using to calculate your tax amount due:

  1. From the toolbar, select Forms.
  2. From the toolbar, select Open Form.
  3. In the search field, enter 1040.
  4. Select 1040/1040SR Wks:Form 1040 or Form 1040-SR Worksheet.
  5. Select Open Form.
  6. Find the Tax Smart Worksheet section on page 3.
  7. Look between lines A and B to see which tax method TurboTax is using.

The amount on your line 16 of your Form 1040 may be lower than the amount in the standard IRS Tax Table. This is because TurboTax is using a different method to calculate your tax liability to minimize your tax bill.

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