Skip to main content
Level 2
February 10, 2021
Question

I am working on a tax return where the taxpayer falls into a 24% tax bracket. This taxpayer completed their tax return on Turbo Tax and is benefiting from a 17.4% rate???

  • February 10, 2021
  • 3 replies
  • 15 views
Filer is MFJ that lives in Florida and is a W2 filer. AGI is $205,571
This topic has been closed for replies.

3 replies

BobKamman
Level 15
February 10, 2021

You're probably looking at the highest bracket, TT is probably figuring the average rate.  What is the difference in tax, between the two programs?

Level 2
February 11, 2021

$3000 more of a refund

qbteachmt
Level 15
February 11, 2021

"$3000 more of a refund"

Gee, isn't that Exactly the amount of those capital gain thingies?

https://www.irs.gov/taxtopics/tc409

 

Don't yell at us; we're volunteers
Just-Lisa-Now-
Intuit Community Champion
February 10, 2021

FWIW I just stuck that 205K number on a  W2 for MFJ and ProSeries shows me top tax bracket is 24% and effective tax rate is 15.34%  so there must be some other stuff entered in TT to get the rate theyre seeing.

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
qbteachmt
Level 15
February 10, 2021

"and is benefiting from a 17.4% rate"

You are comparing two things that are not the same. One is a Component of the other. Any specific item that has its own tax Rate will change the Average from the bracket, as well. How much of the income flows into the next tax bracket will increase the Average, too, because Average is based on the Sum of income. If their income is barely into that next tax bracket, their Average goes down by comparison to an income that hits near the top of the same bracket.

That's why it's called Effective Rate. If we had a Flat Tax system, then your comparison would be valid.

Don't yell at us; we're volunteers