Super simple ?discrepancy?.

Forum|Forum|1 year ago
May 5, 2024
2 replies
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I was attempting to understand some calculations and decided to input only two items into a fresh Turbotax2023 tax return. I input 40k of interest and 10k of LT Capital gains.

Standard Deduction and Married filing jointly (no dependents).

By my calculation, that should result in $22300 taxable ($12300 regular income should be taxed at 10% rate resulting in $1230 federal tax due). However TTAx is indicating $1233 federal tax due. I don't understand where the $3 discrepancy could be in such a simple return. The summary table concurs with my $22300 taxable - fyi. It's well below a Capital Gains 0% threshold of course.

What am I missing?

Best answer by VolvoGirl

See the IRS worksheet on 1040 page 36 for how the tax is figured. Turbo Tax uses the same worksheet.

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

Even though it shows up as income on the first page,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.

VolvoGirl

Employee

Is that the tax on 1040 line 16? Or the tax due on line 37? It may be a penalty on line 38.

mbdowtyAuthor

Both. There is no penalty do both lines are identical at $1233

VolvoGirlAnswer

Employee

See the IRS worksheet on 1040 page 36 for how the tax is figured. Turbo Tax uses the same worksheet.

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

In the online version you need to save your return as a pdf file and include all worksheets to see it.

Bsch4477

Employee

The 10% bracket tops out at $22,000.

mbdowtyAuthor

I'm not sure what I'm misunderstanding. The taxable income is $22300. This is made up of $12300 ordinary ($40000 - $17700) and $10000 LT Cap Gains. You enter the ordinary tax table with $12300 which is all within the 10% bracket i.e. $1230 tax. The LT Cap Gains doesn't come into play because the taxable income of $22300 is within the 0% LT tax bracket.