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The ProConnect software is incorrectly using the 22% rate instead of the 12% rate to calculate taxes on $47,000 of MFJ taxable income. How do I fix this?

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Level 2
 
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9 Replies 9
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Level 15

Did you have the correct filing status checked and shown on the return?  If so, is your client claiming foreign earned income exclusion?

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Still an AllStar
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Level 2

Yes to filing. No to foreign claim except for one foreign stock in a separate portfolio with inconsequential tax implication.

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Level 15

I just checked. $47k in taxable income for MFJ is giving me $5,255 in FIT, matching exactly what's on the tax table.  You probably want to check your entries again.

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Still an AllStar
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Level 2

Thanks, but here is the real deal. I entered a $3,600 capital gain distribution (reinvested). Should be taxed at the 0% rate, if at all, (in my view) since taxable income is < $47g. for MFJ. Yet the software is calculating at the 22% rate and adding, even though it shows the max rate correctly in the worksheet, 12%. I test this by zeroing out the respective numbers which reduces the tax due by that corresponding %.

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Level 15

The $3,600 of CGD will not put your client in the 22% bracket regardless.

There is still something you haven't told us.  What exactly do you mean "zeroing out the respective numbers"?  What are those respective numbers?

If you could outline what those numbers are, we may be able to pinpoint what the problem is.

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Still an AllStar
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Level 2

When I say zeroing out the numbers, I mean removing the capital gain amount that should not be taxed. The tax calculated drops by the corresponding 22% rate so that indicates the software is taxing the gain.

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Level 15

@rabarton01 wrote:

When I say zeroing out the numbers, I mean removing the capital gain amount that should not be taxed. The tax calculated drops by the corresponding 22% rate so that indicates the software is taxing the gain.


For good measure, I recreated what you described but PTO has no problem accounting for the CGD of $3,600.  The resultant tax is still $5,255 as expected.  See screenshot attached. Perhaps you can post a screenshot of the worksheet from your return?  Please make sure you either do not show your client's PII though.

PTO Tax Computation.png

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Still an AllStar
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Level 12

@rabarton01 wrote:

the software is calculating at the 22% rate


Are you looking at the actual income tax on Line 12 of Form 1040?  Or are you looking at how the refund changes?  If you are just looking at the refund, the 'extra' income could change other things.

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Level 2

I am looking on the tax due, Line 12a, and Line 23. Nothing else changes. I even have a Roth IRA that is being charged tax. This is spooky.

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