Why difference in CPA-computed tax vs. tax tables?

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Why difference in CPA-computed tax vs. tax tables?

Postby Gnirk » Sat Apr 06, 2013 2:39 am

I'm perplexed, and hope someone can help me. A CPA does my mom's taxes, and a different CPA does our taxes. Both of them specialize in taxes. I was curious and checked their taxes-owing figures against the IRS website tax tables. In my mom's case, her tax return shows taxes owed of $17,519. When I check her taxable income against the tax tables, the table shows taxes of $19, 242. Nearly 10 percent more. She is a single taxpayer.

In our case, our tax return shows taxes owed of $10,639. The IRS tables show taxes of $12,304 for our taxable income. 15% more. We are married, filing jointly.

What am I missing here?

None of us are subject to AMT.
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Re: Why difference in CPA-computed tax vs. tax tables?

Postby umfundi » Sat Apr 06, 2013 3:22 am

You are paying professionals to do your taxes. Why not ask them?

See instructions for Line 44. Are any of the boxes checked?

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Re: Why difference in CPA-computed tax vs. tax tables?

Postby MrBrainwash » Sat Apr 06, 2013 3:26 am

In all likelihood, you are missing the fact that long term capital gains, qualified dividends, etc. are taxed at lower rates than other income, so if you use the tax tables, you pay too much tax.
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Re: Why difference in CPA-computed tax vs. tax tables?

Postby pjstack » Sat Apr 06, 2013 3:44 am

MrBrainwash wrote:In all likelihood, you are missing the fact that long term capital gains, qualified dividends, etc. are taxed at lower rates than other income, so if you use the tax tables, you pay too much tax.

If you did your own taxes, you would be directed to a rather tedious worksheet that would compute your taxes taking into account the qualified dividends and capital gains.

Read line 20 of Schedule D.
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Re: Why difference in CPA-computed tax vs. tax tables?

Postby Gnirk » Sat Apr 06, 2013 4:05 am

pjstack wrote:
MrBrainwash wrote:In all likelihood, you are missing the fact that long term capital gains, qualified dividends, etc. are taxed at lower rates than other income, so if you use the tax tables, you pay too much tax.

If you did your own taxes, you would be directed to a rather tedious worksheet that would compute your taxes taking into account the qualified dividends and capital gains.

Read line 20 of Schedule D.


Thank You, MrBrainwash and pjstack !
Now it makes sense, and now I know why we have CPAs doing our taxes. :oops:
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