Owed tax calculation

Forum|Forum|2 years ago
April 10, 2023
1 reply
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Turbo tax calculate my Fed taxes for 2022 as $83201, which is much higher than previous years. When I calculate by hand using the 2022 TAX bracket the number is $56098. I tried also the online Intuit TAX estimator and italso gives me a number close to $56000 but not in eighties. I went through twice all the entries and information, everything seems corrects, But it still gives me the same $83201.

Is there a bug in TurboTAX? I purchased it from Amazon.

rjs

Employee

Are you claiming the foreign earned income exclusion? When you take the foreign earned income exclusion, your tax is not just calculated on the taxable income amount on Form 1040 line 15. The amount of excluded foreign income affects the tax because your other income, that is not excluded, is taxed at the same rates that would have applied to that income if you did not get the exclusion. The non-excluded income is "stacked" on top of the excluded income for the purpose of calculating the tax. Therefore some of the other income gets pushed into a higher tax bracket, and is taxed at a higher percentage.

The tax calculation has to be done on the Foreign Earned Income Tax Worksheet. You can look at this worksheet in forms mode in TurboTax if you are using the CD/Download TurboTax software, or on page 35 of the IRS Instructions for Form 1040. Basically the calculation is three steps.

1. Calculate what the tax would be if you did not have the exclusion. That is, add the excluded amount to your taxable income and calculate the tax on the total. (Income on worksheet lines 1 - 3, tax on line 4)

2. Calculate what the tax would be on the excluded amount only, if that were your only income. (Worksheet line 5)

3. Subtract the result of step 2 from the result of step 1. (Worksheet line 6)