Only $800 tax on taxable income of $85k.  Almost all from dividends ($79.6k). I've never come across such a surprising result and went over the "Qualified Dividends and Capital Gain Tax Worksheet" to see how the calculation works.  Line 3 asks if filing Schedule D, which is a "yes".  Both lines 15 and 16 on D were negative numbers (96k and 13k negative, respectively) so line 3 goes in at -0- in the software.  

Line 9 comes up with close to $78k as taxed at zero!  what's left is taxed at a total of $798 (using a combination of the worksheet and the tax tables). 

Line 24 used the tax table to figure $9,940 tax on the $85k figure but didn't add it to the total tax due, since line says to enter the SMALLER of line 23 or line 24 for the "tax on all taxable income"! 

This just doesn't seem logical to me.....how can close to $78k in dividends be zero taxable? 

Can someone explain how this happens?  Does it have something to do with the Schedule D figures?