When I add a taxable income of $1946 from a private pension, my total tax increases by $400 (a rate of 20.55%) when my total taxable income is inside the 12% tax bracket?

Forum|Forum|1 year ago
February 6, 2025
2 replies
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My total taxable income (including the pension amount) is only $69500, which lies well inside the 12% tax bracket for joint married filers in 2024 (taxable incomes between $23200 and $94300 are taxed at 12%).

KeshaH

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howardandhelenharrisAuthor

Kesha H kindly offered to help me with an issue, but her email didn't allow me to respond (see mail delivery error message below). I created a copy of my return for her to analyze as she requested, and attempted to reply to her email with this response:

Hello, Kesha, thanks for offering to look into this issue for me. I created a protected copy of my return as you instructed, with token 1268396. I’m filing in Pennsylvania. Turbotax appears to be calculating my refund correctly with respect to the return as a whole (I ran the numbers and calculated my tax due and got the same result – a refund of $64), but the behavior I described previously doesn’t appear to make sense. When I remove the $1946 taxable pension income from the federal return, the refund jumps to $464, but when I add the $1946 back in, the refund gets reduced to $64. I tried this twice to make sure I was adding the pension income’s 1099-R correctly. I would have expected the refund to decrease by $234 (12% of $1946) to a final value of $230 ($464 minus $234). Any insight you can provide would be greatly appreciated!

All the best,

Howard

Can you please ask Kesha to send another email to [email address removed] so that we can respond? Each time I replied to Kesha's message, I received this error:

Message not delivered

There was a problem delivering your message to [email address removed]. See the technical details below or try resending in a few minutes.

The response was:

DNS Error: DNS type 'mx' lookup of cm.turbotax.intuit.com responded with code NOERROR DNS type 'aaaa' lookup of smtp-qcz.intuit.com. responded with code NXDOMAIN DNS type 'a' lookup of smtp-qcz.intuit.com. responded with code NXDOMAIN DNS type 'aaaa' lookup of smtp-lcz.intuit.com. responded with code NXDOMAIN DNS type 'a' lookup of smtp-lcz.intuit.com. responded with code NXDOMAIN DNS type 'aaaa' lookup of smtp-qy.intuit.com. responded with code NXDOMAIN DNS type 'a' lookup of smtp-qy.intuit.com. responded with code NXDOMAIN DNS type 'aaaa' lookup of smtp-lv.intuit.com. responded with code NXDOMAIN DNS type 'a' lookup of smtp-lv.intuit.com. responded with code NXDOMAIN

dmertz

Employee

My guess would be that you received Social Security benefits in 2024 and the increase in your AGI with the addition of your pension income has caused an increase in the amount of taxable Social Security benefits, increasing the marginal tax rate beyond the tax-bracket rate. That's not uncommon. Compare line 6b of Form 1040 with and without the addition of the pension income.

Other side effects of the increase in AGI are also possible, such as a limitation on some tax credit that depends on AGI.