For H&R Block software users: just curious about that software......I was playing around with the H&R Block online tax calculator (not software) and got a different result than I expected. My results do agree w/ another commercial tax software
(not TT). I am curious about whether the H&R Block tax software has the same issue.
This scenario is an interesting variation of the stacked bars of ordinary income and QDIV/LTCG. Typically in discussions about the stacked bar model, it is assumed that LTCG> 0, so LTCG/QDIV are added together, stacked on top of the ordinary income and then the taxes are calculate separately for both bars , then added together for the total.
The interesting variation is what happens if LTCG< 0 (e.g. large capital loss carryover). The programmer might have assumed that you take the sum of QDIV and LTCG including their polarity......thus resulting in a lower number than QDIV. If my understanding of the QDIV/CG wksht is correct, if CG is negative, then you use 0 , so the bar should be QDIV in value. If the capital loss is <3000> , this results in a $450 difference in tax in the 15% tax bracket which is exactly the difference I see.........so I think I understand what is happening; the question is who is right?
In the bar chart model, I think if CG is LTCG > 0, you add CG to QDIV bar, but if net CG is < 0, you "subtract" from the ordinary income bar making it smaller.
Two simple scenarios to investigate on the Block software:
MFJ , std deduction, both > 65 y.o. ,
1) 32 K ordinary income; 40K QDIV, CG = 0
2) 32K ordinary income; 40K QDIV, CG = -3000 (a loss)
The Block calculator results:
1) Taxable Inc = 50,200 ; Tax= 1020
2) Taxable Inc = 47,200 ; Tax = 1020 I think this tax should be lower by $450
Would be curious what the Block software does. Block says the calculator is just a simple tool for estimating and that the software gets IRS approval and much more scrutiny. No doubt true about the latter, but still ....makes you wonder.