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Level 2
October 31, 2024
Question

Tax Bracket in the Tax Planner

  • October 31, 2024
  • 2 replies
  • 16 views
 

See the image below of the Lacerte Tax Planner Summary page. Note that the tax bracket doesn't shift to the 22% bracket until the taxable income is pushed to $150,260. It should shift at $94,301. Am I missing something? If so, please educate me. What does it take to get this fixed? It works correctly on the tax tables page.

 

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2 replies

sjrcpa
Level 15
October 31, 2024

How much qualified dividends and/or long term capital gains are in that AGI?

The more I know the more I don’t know.
rbynaker
Level 13
October 31, 2024

@sjrcpa wrote:

How much qualified dividends and/or long term capital gains are in that AGI?


I was always pretty good at guessing how many M&Ms are in the jar? 🙂  I'll guess 56,000.

fiscalisAuthor
Level 2
October 31, 2024

You're VERY close. The total is $56,002. OK. THANKS. So, why doesn't the software make the same allowances and corresponding information on the Tax Table page under the Tax tab? To investigate further, I made a totally new case starting from scratch for a married couple filing MFJ. The income entries consist only of an IRA distribution in the amount of $126,599 which, minus the standard deduction leaves us with taxable income of $94,299 ($1 below the max 12% threshold). At this point, the percentages all look fine. However, there's a full $25 of income missing from the total income shown in the 12% bracket (71,075) which when added to the 10% bracket amount of $23,200, actually totals $92,275, $24, short of what should be there. And, THEN, when I add $1 to the IRA distribution, which takes the total taxable income to $94,300, $23,200 is shown in the 10% bracket and $71,100 is shown in the 15% bracket, AND another $25 comes out of nowhere and is thrown into the 22% bracket for a LISTED total of $94,325 when the software shows a total taxable income on that page of $94,300, and the SUMMARY page shows us in the 22% bracket when we've yet to enter it.

Clearly there seem to be some calculation issues at play here. What do you think?

THANK YOU!

rbynaker
Level 13
October 31, 2024

I'm not even a Lacerte user but just a guess, if you work through the QDLTCG Worksheet you'll end up looking up the non-QDLTCG income in the tax table instead of using the rate schedule (because it's under $100K).  If $1 jumps you from one row to the next the tax cost at that level is $11 (22% of the $50 spread).  It makes for some weird math that doesn't align with common sense (i.e. donate $1 to charity, save $11 on taxes).

Rick