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I was updating my tax planning worksheet this morning.
My wife and I file jointly, already submitted using Taxact.
Without going into too much detail, our marginal tax rate is 22%.
I verified that I'm using the 2019 tax tables.
For some reason, the tax (1040 line 12b) from Taxact is coming out $94 lower than I expect it to be.
The IRS tax table and my own calculations in my spreadsheet appear to agree with each other.

Anyone else experience this?
I allow for the possibility that I could be doing something wrong, but the steps from line 11b to 12b seem pretty straightforward.
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No. of Recommendations: 2
I was updating my tax planning worksheet this morning.
My wife and I file jointly, already submitted using Taxact.
Without going into too much detail, our marginal tax rate is 22%.
I verified that I'm using the 2019 tax tables.
For some reason, the tax (1040 line 12b) from Taxact is coming out $94 lower than I expect it to be.
The IRS tax table and my own calculations in my spreadsheet appear to agree with each other.

Anyone else experience this?
I allow for the possibility that I could be doing something wrong, but the steps from line 11b to 12b seem pretty straightforward.

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Also without going into too much detail, my first guess would be:
Do you have any qualified dividends or long-term capital gains, including capital gain distributions? If so your calculations need to reflect the use of the QDLTCG worksheet.

And you can use a shortcut method, rather than every line, in many cases. But you do have to:
1. Back out the qual. divs. and LT gains from your taxable income,
2. Figure the tax on the balance of your taxable income.
3. Figure the tax on the qual. divs. and LT gains, which may be zero or up to 15%. If you're in the 22% bracket, 15% would be the relevant number, or maybe a little less, depending on how close you are to the threshold.
4. Add the two together.
This is basically what the worksheet does, but it's technically more complicated.

If that doesn't explain the difference, then I wouldn't venture a second guess without seeing your return. If your qualified dividends and LT gains are about $625, that would do it.

Bill
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Also without going into too much detail, my first guess would be:
Do you have any qualified dividends or long-term capital gains, including capital gain distributions? If so your calculations need to reflect the use of the QDLTCG worksheet.


Ah. That seems to explain it. Will have to read up to see how all of this flows to the 1040 form. A schedule D printed with capital gains, but no QDLTCG Worksheet was printed when I filed.

Thank you so much.
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Also without going into too much detail, my first guess would be:
Do you have any qualified dividends or long-term capital gains, including capital gain distributions?


That was my first guess, too. But for lurkers, I also have a second guess:

I would add adjusting for the 20% tax cut on qualified business income, which can be generated by ETFs, mutual funds and REITs, even if you don't actually own a business.

AJ
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I would add adjusting for the 20% tax cut on qualified business income, which can be generated by ETFs, mutual funds and REITs, even if you don't actually own a business.

We got a whopping $3 Qualified Business Income deduction (line 10) this year, but it was the Qualified Dividends & Capital Gains Worksheet results that accounted for the difference in my calculations. Until a couple of years ago, when I received an inheritance, we seldom had Dividends and Capital Gains to any significant degree, as essentially all of our investments were in retirement accounts. I'll need to start including that in my planning calculations to avoid confusion going forward.

I figured out in Taxact how to print the worksheet, so that I have a copy in our files for next year, when I will have forgotten all of this stuff. Of course, the forms will have likely changed again.

Thanks!
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