Total Income: Step-by-Step vs. Form 1040 still not correct

Forum|Forum|2 years ago
February 16, 2024
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In a prior thread titled "Total Income: Step-by-Step vs. Form 1040" (now closed and marked "Solved"), you explained that the Total Income displayed in "Let's Review Your Numbers" differs from Line 9 on Form 1040 because:

"Total income" in the summary is the total of all items of income entered whether taxable or not. Form 1040 line 9 only includes the taxable portion of your total income (before subtracting any deductions)."

I understand this and it makes sense. However, the "Total Income" in the summary is less than the total of the actual income items I have entered into TurboTax. All the entries are correct on Form 1040 and Line 9 is correct (so all tax calculations are correct), but the "Total Income" summary does not accurately reflect the total of the entered income items.

Best answer by TerryRichmond

I think I have figured out how the "Your Total Income" as reported by Step-by-Step in "Let's Review Your Numbers" is calculated. I’m not 100% certain this correct since there are some Lines on Form 1040 where I don’t have entries, but the best I can tell this should be really close if not spot on.

“Your Total Income” is calculated by adding up the following lines from Form 1040:

Line 1i - Nontaxable combat pay election

Line 1z - total of Lines 1a through 1h

Line 2a - Tax-except interest

Line 2b - Taxable interest

Line 3a - Qualified dividends

Line 3b - Ordinary dividends

The larger amount of Line 4a OR Line 4b (not both) - IRA Distributions

The larger amount of Line 5a OR Line 5b (not both) - Pensions and annuities

The larger amount of Line 6a OR Line 6b (not both) - Social security benefits

Line 7 - Capital gain or loss

Line 8 - Other income from Schedule 1

"Your Total Income" as reported by Step-by-Step in "Let's Review Your Numbers" will not match Line 9 on Form 1040 if you have any tax-except income.

DawnC

Employee

The summary in TurboTax includes everything you entered, taxable or not. Is your tax return correct? Is there anything TurboTax erroneously added or left out on your tax return?

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TerryRichmondAuthor

What I am trying to point out is that there are inconsistencies with amounts that have actually been entered and some of the summary/history screens/forms.

1. The tax return appears to be correct. Form 1040 appears to be correct.

2. The "Your Total Income" amount displayed on the EasyStep Federal Taxes tab, Federal Review sub-tab summary screen does not "includes everything you entered, taxable or not." as stated. In my case, the amount shown for "Your Total Income" is LESS than what was actually entered. The amount it is off does not match any individual or combination of income entries. No idea how the amount was calculated.

3. To add more confusion, the Tax History Report shows "Total Income" as the amount from Line 9 (total income) or Line 11 (adjusted gross income) of Form 1040. The inconsistency here is that Line 9 or 11 are adjusted after non-taxable income has been deducted (such as only including the taxable amount of Social Security benefits vs. the entire amount of SS benefits, and also adjusted for Capital Losses in my case).

In summary, 1) the actual amount of income entered, 2) the Total Income on the Federal Review summary screen, and 3) the Total Income on the Tax History Report all have different values. The confusion comes from a) all these fields being labeled as "Total Income", b) an unpredicted amount being shown on the Federal Review summary screen, and c) "The summary in TurboTax includes everything you entered, taxable or not.", when in fact it does not.

Again, calculations on Form 1040 appear to be correct.

Hope this clarifies the concern.