Effective Tax Rate

Forum|Forum|2 years ago
March 29, 2024
2 replies
12 views

Why does ProSeries calculate the 1040 effective tax rate using Tax divided by Total Income instead Tax divided by Taxable Income, when every outside source I can find uses Taxable Income?

ProSeries Professional

This topic has been closed for replies.

Best answer by abctax55

https://www.bankrate.com/taxes/marginal-vs-effective-tax-rate/

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ljsmith2

Level 5

I find the effective tax rate based on AGI useful for clients who are adjusting withholding. They can watch their paystubs to be sure the correct percentage of tax is being withheld. Easier than accounting for deductions.

S

StephanieSAuthor

Level 3

I find it useful too, but I had a client that was asking me and sending me articles. Thanks though!

abctax55Answer

Level 15

https://www.bankrate.com/taxes/marginal-vs-effective-tax-rate/

HumanKind... Be Both

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StephanieSAuthor

Level 3

Most places seem to use taxable income, but thanks for finding one that uses total. It is odd that there's not a standard though. (Although it's just an informational, so I know it doesn't matter, but I had a client with the question.)

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