I think this is it.It is not clear that you are in the 22% bracket. You might be if you are single. You may not be if you are married filing jointly.I am doing my taxes using turbo tax premium and have run into a problem. I called turbo tax help and spent almost 2 hours on the phone with them to no satisfaction. So I am coming to this forum where I know there are a lot of smart people, who I hope can straighten me out.
I entered all my information and upon completion line 15 form 1040-SR taxable income was $121,057 much of this being capitol gains. Line 16 tax due was $12,440, which was fine to this point and obviously I am in the 22% bracket.
Now starts the problem, before I filed I see I missed one 1099-R for a distribution from an annuity with a taxable amount of $4,793.32. So I entered all the information from that form. Now line 15 is $125,850 which I agree with since I added the taxable amount of $4,793. Now comes the problem, line 16 tax due now says $13,735 which is an increase of $1,295. I say that the increase should have been $1,054 which is 22% of $4,793 which is $241 less than what turbo tax shows. I looked over all my documents and don't see a problem. I think there is a problem with turbo tax. What am I missing?
Thanks for any help you can give me.
The 22% bracket is ordinary income - it does not include long term capital gains or qualified dividends. You said that much of that $121,057 is capital gains....if a lot of it is long term cap gains, that is not part of the income that is taxed as ordinary income (at 12% or 22%).
It is possible you were originally in the 12% bracket (most of which is also the 0% LTCG bracket) and adding the extra income pushed you into and probably through a bit of income that was taxed at 27%....resulting in the crazy looking numbers.
If you are willing to share all the numbers on lines 1 - 15 and your filing status....someone could tell you for sure. Mostly interested in line 3a and Schedule D.
Your ordinary income is taxed at 10% up to $22,000, then at 12% up to $89,450.
Capital gains are taxed at 0% up to the amount that brings total taxable income (ordinary plus CG) to $89,250
then at 15% above that. You can say that capital gains stack on top of ordinary income.
You added $4793 of ordinary income which is taxed at 12% = $575 extra tax.
This pushes $4793 of capital gains from the 0% to the 15% bracket adding $719 extra tax
Net effect is 27% tax on the extra money, 575+719=$1294 (close enough to 1,295)
Statistics: Posted by eukonomos — Sat Feb 10, 2024 1:02 pm — Replies 8 — Views 286