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Turbo Tax Basic Tax Rate Calculation Check

Forum|Forum|2 years ago
March 6, 2024
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I entered several Income numbers on a W2 to compare TurboTax output to Smart Asset and an excel function I wrote. Smart Asset and my numbers always match, but TurboTax is off by some number of dollars.

Does anyone know why? I did a similar test last year and recall getting similar deviations. Didn't follow-up at that time.

One of the numbers is correct, the last one. It is a different tax rate though.

Income	Deduction	Turbo Tax	SmartAsset	My number
89250	27700	6949	6946	6946
100000	27700	8239	8236	8236
120000	27700	10927	10921	10921
114450	27700	9973	9970	9970
114500	27700	9979	9976	9976
520000	27700	116094	116094	116094

Thanks,
Greg

Best answer by dmertz

TurboTax's numbers are correct because for taxable amounts up to $100,000 one is required to use the Tax Table which produces taxable amounts based on $50 increments of income in the ranges that you are testing (except for $520,000 where you actually see agreement) and the tax is based on the midpoint of the step. If you add $25 to each of your income amounts you should see agreement. In other words, where there is disagreement the error is in both your spreadsheet result and in the result from SmartAsset.

Also, in your spreadsheet, use TRUNC((income-deduction)/50,0)*50+25 in place of income minus deduction when income minus deduction is $100,000 or less. (This won't be quite right at lower taxable income amounts where the table uses $25 income steps.)

G

gwaddogAuthor

The numbers were all for Married Filing Jointly. Tx

DawnC

Employee

Rounding issues, maybe. Intuit works to ensure the accuracy of the calculations on every form prepared using the Services. The TurboTax Accurate Calculation Guarantee is for the lifetime of your 2023 individual tax return, which Intuit defines as seven (7) years from the date you filed it using TurboTax Online.

100% Accurate Calculations Guarantee

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"

G

gwaddogAuthor

A rounding error of $1 may be acceptable, but these are in the range of $3-6. Turbo Tax tax calculation is yielding a higher amount of tax people owe. I would think you would want to investigate a bit. Here is yet a 3rd example of calculations which are the same as Smart Asset and my other formula. These are done purely in Excel.

		Income	89250	100000	120000	114450	114500	520000
		Deduction	27700	27700	27700	27700	27700	27700
Married Filing Jointly	Taxable Income	61550	72300	92300	86750	86800	492300
22000	10%	0	0	0	0	0	0	0
89450	12%	2200	6946	8236	0	9970	9976	0
190750	22%	10294	0	0	10921	0	0	0
364200	24%	32580	0	0	0	0	0	0
462500	32%	74208	0	0	0	0	0	0
693750	35%	105664	0	0	0	0	0	116094
	37%	186601.5	0	0	0	0	0	0
		Tax Total	6946	8236	10921	9970	9976	116094
		Turbo Tax Tax Total	6949	8239	10927	9973	9979	116094
		Turbo Tax Over Tax Calc	$ 3.00	$ 3.00	$ 6.00	$ 3.00	$ 3.00	$ -

Thanks for having someone check the Turbo Tax Algorithm which appears to be off in certain Tax percentages.

Happy to send the Excel to someone who will look into it.

D

dmertzAnswer

Employee

TurboTax's numbers are correct because for taxable amounts up to $100,000 one is required to use the Tax Table which produces taxable amounts based on $50 increments of income in the ranges that you are testing (except for $520,000 where you actually see agreement) and the tax is based on the midpoint of the step. If you add $25 to each of your income amounts you should see agreement. In other words, where there is disagreement the error is in both your spreadsheet result and in the result from SmartAsset.

Also, in your spreadsheet, use TRUNC((income-deduction)/50,0)*50+25 in place of income minus deduction when income minus deduction is $100,000 or less. (This won't be quite right at lower taxable income amounts where the table uses $25 income steps.)