Turbotax using higher bracket?

[frugalor]

I was wondering has anyone checked when they enter 1099 interest into turbotax, they are correctly deducting the money for Federal and State?

I am seeing my Federal deduction is at a higher tax bracket than I expected.

I checked the filing status, and it's correct: "Married filing jointly"

[FiveK]

The 1099-INT box 1 amount is added to, not deducted from, federal and state income. Is there a typo in your question (or more details needed)?

[frugalor]

The 1099-INT box 1 amount is added to, not deducted from, federal and state income. Is there a typo in your question (or more details needed)?

I mean my tax refund decreases as I enter my interest income

[cacophony]

The 1099-INT box 1 amount is added to, not deducted from, federal and state income. Is there a typo in your question (or more details needed)?

I mean my tax refund decreases as I enter my interest income

If you enter interest income your amount owed should increase, which means a tax refund should decrease. So it sounds like it's doing the correct thing.

[FiveK]

The 1099-INT box 1 amount is added to, not deducted from, federal and state income. Is there a typo in your question (or more details needed)?

I mean my tax refund decreases as I enter my interest income

OK, understood.

You may be in the not uncommon situation that your marginal tax rate is higher than your nominal bracket rate.

[Katietsu]

Are you subject to the 3.8% NIIT? It applies if your MAGI is over $200k if single or $250k if married. For instance, a married couple with an AGI of $300k would pay 27.8% on each additional dollar of interest. There are also different credits that are phased out as income rising. The additional tax plus the loss of a credit will mean that each dollar of interest results in a greater loss of refund than just predicted by the marginal tax bracket.

[stan1]

Are you subject to Net Investment Income Tax (NIIT)? It's an extra 3.8% tax as income goes up. Could be why it looks like your refund amount is dropping faster than you think it should be. It can come into effect for MFJ MAGI over $250K and MFS MAGI over $200K.

https://www.irs.gov/newsroom/questions- ... %20amounts.

[frugalor]

Oh. You guys might be right. I am over 250K filing married jointly. So it's whatever my marginal tax bracket + 3.8%?

[Hyperchicken]

What type of 1099 are we talking about here?

[frugalor]

What type of 1099 are we talking about here?

1099-INT

[FiveK]

Oh. You guys might be right. I am over 250K filing married jointly. So it's whatever my marginal tax bracket + 3.8%?

If you want a picture of your marginal tax rates, and can use Excel, the personal finance toolbox spreadsheet can show that.

If you add, say, $100 of interest, by how much does your federal (and, if applicable, state) tax change? Is that the same rate if you add some larger amount, say $10,000?

[jebmke]

Oh. You guys might be right. I am over 250K filing married jointly. So it's whatever my marginal tax bracket + 3.8%?

You should be able to see this derived in the various forms. There is a separate for for NIIT

[LookinAround]

Oh. You guys might be right. I am over 250K filing married jointly. So it's whatever my marginal tax bracket + 3.8%?

Look in TurboTax for Form 8960. It's used to calculate NIIT when NIIT rules apply.