Help figuring out Q4 estimated tax payment to meet 90% safe harbor

[Aguilar]

I could use a hand figuring out my Q4 estimated tax payment amount. Looks like I'm about $2600 short of the 90% safe harbor rule.

Which form(s) should I fill out?

I thought I had this all sorted out but my Q4 dividends ended up being much bigger than I estimated, and my social security disability payments were also larger. My math for fed taxes is below. I'm assuming 85% of my SSDI income is taxable. This is the max.

2024 Gross Tax Liability: fed AGI $134,013 (all income except for tax exempt munis) - standard deduction of $14600 = $119,413
Income Tax Liability: $119,413 - $300 (estimated Foreign Tax Credit) = $119,113
24% bracket, fed taxes owed: (1160+4265.88+11742.28+4532.88) = $21,701
Safe harbor 90% of taxes owed = $19,531
Total fed tax withheld in 2024: $16,897
I owe $2,634


I'd also like to figure out if I should make a Q4 estimated tax payment for NY state. I didn't think I needed to but with the larger dividends, I probably do. (SSDI payments aren't taxed by NY so that doesn't have any bearing). Is form IT-2105.9-I the right form for that? Might be a lot of work and not really worth the hassle, not sure.

[Makefile]

You can fill out a rough draft Form 2210 to run through the calculation.

The 90% rule caps the total amount you owed during 2024, but unfortunately you only automatically meet it when paying using withholding. When you make estimated payments, the calculation on 2210 will split it up into the four payments that were due. But you do could Schedule AI to reflect the fact that there was a lump sum late in the year, but that is a more complex calculation.

There is also the 100%-of-last-year (or 110%) cap you will see on Form 2210, that may help if your tax increased significantly from 2023 to 2024.

It doesn't look like you are accounting for qualified dividends, if any, which would decrease your tax liability a bit.

[BD w/ Kung-Fu Grip]

90% has to be paid timely to qualify for safe harbor. A $2,634 payment now won't necessarily satisfy. It might, depending on how early in the year the withholdings occurred.

What was your tax liability for 2023? If it was $16,897 or less, you already qualify for the safe harbor protection.

[cas]

[. . .]but my Q4 dividends ended up being much bigger than I estimated[. . .]

[. . .]24% bracket, fed taxes owed: (1160+4265.88+11742.28+4532.88) = $21,701[. . .]

Are your dividends of the sort that are likely to be qualified? (from stocks or stock funds, especially US; not from bond funds)

If so, your tax bill is likely lower than you are currently calculating. At least ... I think you are implying that you are assuming all income is taxed in the tax brackets for ordinary income.

[FiveK]

Have you looked at using any Tax estimation tools to check your tax calculations?

[boomer_techie]

24% bracket, fed taxes owed: (1160+4265.88+11742.28+4532.88) = $21,701

Using the numbers I've found in IRS documents:
24% bracket, fed taxes owed: (1160+4266.00+11742.50+4533.12) = $21,701.62 = $21,702
Or
24% bracket, fed taxes owed: (119413*0.24)-6957.50 = 28659.12-6957.50 = $21,701.62

[Aguilar]

90% has to be paid timely to qualify for safe harbor. A $2,634 payment now won't necessarily satisfy. It might, depending on how early in the year the withholdings occurred.

What was your tax liability for 2023? If it was $16,897 or less, you already qualify for the safe harbor protection.

2023 taxes owed was $45,232 (1040, line 24). I worked till near the end of that year so my income was much higher.

The safe harbor I'm trying to meet is this one: pay at least 90% of the tax you owe for the current year. According to the IRS, this safe harbor can be met through withholding, estimated tax payments, or a combo of the two.

My fed taxes withheld in 2024 were:

Q1 $12177 + $958 withheld
Q2 $352.80 withheld
Q3 none withheld; I paid $200 estimated tax
Q4 $3,209 withheld; TBD estimated tax payment
Total before Q4 estimated tax payment: $16,897

I need to recalculate my taxes owed for 2024 once I sort out the qualified vs ordinary div breakdown.

Once I have the total taxes owed, I planned to calculate the amount I should pay in Q4 estimated taxes to meet the 90% safe harbor. Considering most of my withholding was in Q1, I don't think I'd have much if any underpayment penalty.

Am I missing something here?

[Aguilar]

[. . .]but my Q4 dividends ended up being much bigger than I estimated[. . .]

[. . .]24% bracket, fed taxes owed: (1160+4265.88+11742.28+4532.88) = $21,701[. . .]

Are your dividends of the sort that are likely to be qualified? (from stocks or stock funds, especially US; not from bond funds)

If so, your tax bill is likely lower than you are currently calculating. At least ... I think you are implying that you are assuming all income is taxed in the tax brackets for ordinary income.

Thanks for flagging that. I assumed all dividends were ordinary.

I can base my 2024 qualified div on my 2023 return.

My 2023 1040 shows:
7,748 tax exempt interest (line 2a)
20,799 qualified div (line 3a)
24,386 ordinary div (line 3b)

According to this article, qualified div are a subset of ordinary div when it comes to the 1040. https://ttlc.intuit.com/community/taxes ... s/00/44588

So of the $24,386 ordinary div, $20,799 were qualified. That's about 85%.

Applying 85% to my 2024 non tax-exempt dividends, I get:

Total dividends in 2024: $37,923
Tax exempt $10,108
Non tax exempt $27,815
Qualified $23,642.75 (85% of non tax-exempt div)

So my 2024 1040 should have:
10,108 tax exempt interest (line 2a)
23,643 qualified div (line 3a)
27,815 ordinary div (line 3b)

Is this correct?

One thing that confuses me is that my qualified div are taxed at 15% while ordinary are taxed at marginal income tax rate, yet 1040 line 3b doesn't contain the amount of your ordinary div. Instead, it shows the combo of your ordinary and qualified div. Is something else happening in the forms that I'm not seeing?

Assuming the info above is right, here's my new total tax calc:

Taxable income: $110,370 (includes ordinary div $4172 but excludes qualified div)
Minus $14,600 standard deduction = $95,770
Minus $300 estimated Foreign Tax Credit = $95,470
22% bracket, marginal income taxes owed: $1160+4265.88+10630=$16,056
Qualified div: $23,642.75 (taxed at 15%) = $3,546
Total taxes owed (marginal tax plus qualified div taxes): $19,602
Safe harbor 90% of taxes owed = $17,642
Total fed tax withheld in 2024 so far (includes estimated taxes paid): $16,897
I owe $745 to meet safe harbor. Therefore, I'll pay $745 estimated tax for Q4.

I could be off on this. Getting an expert opinion would be great. Once I sort out fed, I'd do the same approach to calc my NY taxes owed.

[FactualFran]

My fed taxes withheld in 2024 were:

Q1 $12177 + $958 withheld
Q2 $352.80 withheld
Q3 none withheld; I paid $200 estimated tax
Q4 $3,209 withheld; TBD estimated tax payment
Total before Q4 estimated tax payment: $16,897

Based on those withhold amounts and a required annual minimum payment in another post, for the year as whole there will be an underpayment of $945 based on withholding alone ($17,642 required minimum minus $16,697 withheld).

Using the default treatment of 1/4 of the withholding for the year being credited to each income tax quarter, you needed to have paid about $240 more each quarter. For each of the first two quarters there was an underpayment of that amount. The estimated payment of $200 made for the third quarter reduces the underpayment for that quarter. The underpayment through the fourth quarter is about $750. The underpayment penalty for the fourth quarter can be reduced or eliminated by making an estimated payment for the fourth quarter.

Using the non-default treatment of the withholding for quarter being the actual amount withheld, you do not have underpayments for the first three quarters. The underpayment penalty for the fourth quarter is about $15, which can be reduced or eliminated by making an estimated payment for the fourth quarter.

[Edit: corrected that the $15 is a penalty amount, not the underpayment amount. A post by lstone19 has the correct underpayment amount for the fourth quarter of $747.]

[Mullins]

I'd use something like freetaxusa 2024 (now available) to do a dummy tax return to see how it results inputting Form 2210.

[cas]

One thing that confuses me is that my qualified div are taxed at 15% while ordinary are taxed at marginal income tax rate, yet 1040 line 3b doesn't contain the amount of your ordinary div. Instead, it shows the combo of your ordinary and qualified div. Is something else happening in the forms that I'm not seeing?

Yes, you are missing the Form 1040 Line 16 instructions (p. 35) to use the Qualified Dividend and Capital Gain Tax Worksheet (p. 36).

Qualified Dividends and Capital Gain
Tax Worksheet.

Use the Qualified Dividends and Capital Gain Tax Worksheet,
later, to figure your tax if [. . .] any of the following applies.

• You reported qualified dividends
on Form 1040 or 1040-SR, line 3a.

[. . .]

This worksheet divides your income into two piles - 1) ordinary income and 2) QD/LTCG - then figures the tax on them separately and adds it together.

I highly recommend using one of the tax estimation tools that FiveK linked above. The dinkytown one should be quick, easy, and accurate for your situation to get the tax owed. (Although you would need a fuller-featured one to enter estimated tax payments and see what happens with Form 2210.)

[Aguilar]

My fed taxes withheld in 2024 were:

Q1 $12177 + $958 withheld
Q2 $352.80 withheld
Q3 none withheld; I paid $200 estimated tax
Q4 $3,209 withheld; TBD estimated tax payment
Total before Q4 estimated tax payment: $16,897

Based on those withhold amounts and a required annual minimum payment in another post, for the year as whole there will be an underpayment of $945 based on withholding alone ($17,642 required minimum minus $16,697 withheld).

Using the default treatment of 1/4 of the withholding for the year being credited to each income tax quarter, you needed to have paid about $240 more each quarter. For each of the first two quarters there was an underpayment of that amount. The estimated payment of $200 made for the third quarter reduces the underpayment for that quarter. The underpayment through the fourth quarter is about $750. The underpayment penalty for the fourth quarter can be reduced or eliminated by making an estimated payment for the fourth quarter.

Using the non-default treatment of the withholding for quarter being the actual amount withheld, you do not have underpayments for the first three quarters. The underpayment for the fourth quarter is about $15, which can be reduced or eliminated by making an estimated payment for the fourth quarter.

Thanks. I had posted about this maybe 4 months ago but those figures were incorrect. Once I got my Q4 dividends I realized my prior estimate was way under. Same with SSDI payments.

So is your assessment above based on those old figures or the new ones I posted in this thread? If the latter, are you saying I just need to make a Q4 estimated payment of $15? Which form should I complete when I do my taxes to ensure the non-default treatment is applied, form 2210?

[Aguilar]

One thing that confuses me is that my qualified div are taxed at 15% while ordinary are taxed at marginal income tax rate, yet 1040 line 3b doesn't contain the amount of your ordinary div. Instead, it shows the combo of your ordinary and qualified div. Is something else happening in the forms that I'm not seeing?

Yes, you are missing the Form 1040 Line 16 instructions (p. 35) to use the Qualified Dividend and Capital Gain Tax Worksheet (p. 36).

Qualified Dividends and Capital Gain
Tax Worksheet.

Use the Qualified Dividends and Capital Gain Tax Worksheet,
later, to figure your tax if [. . .] any of the following applies.

• You reported qualified dividends
on Form 1040 or 1040-SR, line 3a.

[. . .]

This worksheet divides your income into two piles - 1) ordinary income and 2) QD/LTCG - then figures the tax on them separately and adds it together.

I highly recommend using one of the tax estimation tools that FiveK linked above. The dinkytown one should be quick, easy, and accurate for your situation to get the tax owed. (Although you would need a fuller-featured one to enter estimated tax payments and see what happens with Form 2210.)

I used one of those estimation tools last week but it didn’t allow me to enter estimated tax and it didn’t answer my question about what I should pay to avoid an underpayment penalty. Which tool do you recommend for my situation?

[vtMaps]

I used one of those estimation tools last week but it didn’t allow me to enter estimated tax

The important thing is: use the tool to figure out what your tax liability is for 2024. Then you (not the tool) can figure out if your payments (estimated and withheld) get you to safe harbor.

--vtMaps

[Aguilar]

I used one of those estimation tools last week but it didn’t allow me to enter estimated tax

The important thing is: use the tool to figure out what your tax liability is for 2024. Then you (not the tool) can figure out if your payments (estimated and withheld) get you to safe harbor.

--vtMaps

I have to ask, is there something wrong with my math to assess taxes owed? Cause my 2024 taxes are pretty simple and my math, at least from my vantage pt, is clear. The only wildcards are the amount of qualified vs ordinary div and the percentage of my SSDI that’s taxable, neither of which these tools can answer.

[FiveK]

The only wildcards are the amount of qualified vs ordinary div

Correct, unknown for sure until you get your 1099-DIV

and the percentage of my SSDI that’s taxable

Any of the tax estimation tools should calculate this for you, based on way Taxation of Social Security benefits works.

Haven't checked whether your math to assess taxes owed is correct or not because the suggested tools should make it easy for you to do so yourself.

[FactualFran]

Thanks. I had posted about this maybe 4 months ago but those figures were incorrect. Once I got my Q4 dividends I realized my prior estimate was way under. Same with SSDI payments.

So is your assessment above based on those old figures or the new ones I posted in this thread? If the latter, are you saying I just need to make a Q4 estimated payment of $15? Which form should I complete when I do my taxes to ensure the non-default treatment is applied, form 2210?

I used the figures stated in my post: "$17,642 required minimum minus $16,697 withheld". The $17,642 was from a post by your earlier today (12:59 central time) that included "Safe harbor 90% of taxes owed = $17,642". The $16,697 is the sum of the actual amount withheld for the quarters in a post by you earlier today (12:22 central time) after "My fed taxes withheld in 2024 were:"; those lines from your post were quoted in my post.

To treat withholding as paid on the dates it was actually withheld, you need to include a Form 2210 with your income tax return. On that Form you need to check box D in Part II (Reason for Filing) and complete Part III (Penalty Computation), using on line 11 the actual amounts withheld during the income tax quarters. In case the IRS asks you to justify the amounts on line 11, you should have payroll or benefit statements that show when the amounts were withheld.

[lstone19]

Using the default treatment of 1/4 of the withholding for the year being credited to each income tax quarter, you needed to have paid about $240 more each quarter. For each of the first two quarters there was an underpayment of that amount. The estimated payment of $200 made for the third quarter reduces the underpayment for that quarter. The underpayment through the fourth quarter is about $750. The underpayment penalty for the fourth quarter can be reduced or eliminated by making an estimated payment for the fourth quarter.

Using the non-default treatment of the withholding for quarter being the actual amount withheld, you do not have underpayments for the first three quarters. The underpayment for the fourth quarter is about $15, which can be reduced or eliminated by making an estimated payment for the fourth quarter.

FactualFran beat me to it but the treat withholding by the actual date of withholding option is a rarely mentioned option here. For the OP, on 2210, you check reason for filing D in Part II ("Your penalty is lower when figured by treating the federal income tax withheld from your income as paid on the dates it was actually withheld, instead of in equal amounts on the payment due dates. You must figure your penalty and file Form 2210."). In Part III line 11, you'll list the actual amount withheld plus paid as estimated payments each quarter (for this line, quarters are 1/1-4/15, 4/16-6/15, 6/16-9/15, and 9/16-12/31). You then must file 2210 with your tax return. Note that despite what some people think, this option is completely independent of annualizing income - using actual date of withholding does not force you to annualize (nothing ever forces you to annualize other than a desire to reduce a penalty).

EDIT: Oops, largely repeats FactualFran's latest which was being written at the same time as mine.

[Aguilar]

Thanks. I had posted about this maybe 4 months ago but those figures were incorrect. Once I got my Q4 dividends I realized my prior estimate was way under. Same with SSDI payments.

So is your assessment above based on those old figures or the new ones I posted in this thread? If the latter, are you saying I just need to make a Q4 estimated payment of $15? Which form should I complete when I do my taxes to ensure the non-default treatment is applied, form 2210?

I used the figures stated in my post: "$17,642 required minimum minus $16,697 withheld". The $17,642 was from a post by your earlier today (12:59 central time) that included "Safe harbor 90% of taxes owed = $17,642". The $16,697 is the sum of the actual amount withheld for the quarters in a post by you earlier today (12:22 central time) after "My fed taxes withheld in 2024 were:"; those lines from your post were quoted in my post.

To treat withholding as paid on the dates it was actually withheld, you need to include a Form 2210 with your income tax return. On that Form you need to check box D in Part II (Reason for Filing) and complete Part III (Penalty Computation), using on line 11 the actual amounts withheld during the income tax quarters. In case the IRS asks you to justify the amounts on line 11, you should have payroll or benefit statements that show when the amounts were withheld.

Thanks FactualFran. I appreciate the clarification.

I updated my total fed tax withheld a little later in this post to $16,897. I previously omitted the $200 estimated tax payment I made in Q3 2024. Does this payment result in me not having an underpayment for Q4 and thus no need to make a Q4 estimated tax payment?

I'll be sure to fill out form 2210 and will follow the steps you indicated above, when I do my taxes.

[Aguilar]

Using the default treatment of 1/4 of the withholding for the year being credited to each income tax quarter, you needed to have paid about $240 more each quarter. For each of the first two quarters there was an underpayment of that amount. The estimated payment of $200 made for the third quarter reduces the underpayment for that quarter. The underpayment through the fourth quarter is about $750. The underpayment penalty for the fourth quarter can be reduced or eliminated by making an estimated payment for the fourth quarter.

Using the non-default treatment of the withholding for quarter being the actual amount withheld, you do not have underpayments for the first three quarters. The underpayment for the fourth quarter is about $15, which can be reduced or eliminated by making an estimated payment for the fourth quarter.

FactualFran beat me to it but the treat withholding by the actual date of withholding option is a rarely mentioned option here. For the OP, on 2210, you check reason for filing D in Part II ("Your penalty is lower when figured by treating the federal income tax withheld from your income as paid on the dates it was actually withheld, instead of in equal amounts on the payment due dates. You must figure your penalty and file Form 2210."). In Part III line 11, you'll list the actual amount withheld plus paid as estimated payments each quarter (for this line, quarters are 1/1-4/15, 4/16-6/15, 6/16-9/15, and 9/16-12/31). You then must file 2210 with your tax return. Note that despite what some people think, this option is completely independent of annualizing income - using actual date of withholding does not force you to annualize (nothing ever forces you to annualize other than a desire to reduce a penalty).

EDIT: Oops, largely repeats FactualFran's latest which was being written at the same time as mine.

Thank you as well for this info. I recall FactualFran mentioning this to me several months ago but unfortunately I forgot about it. Very appreciative to get the reminder from you both. In my case, this way of handling withholding makes the most sense since I withheld so much early in the year.

[lstone19]

I used the figures stated in my post: "$17,642 required minimum minus $16,697 withheld". The $17,642 was from a post by your earlier today (12:59 central time) that included "Safe harbor 90% of taxes owed = $17,642". The $16,697 is the sum of the actual amount withheld for the quarters in a post by you earlier today (12:22 central time) after "My fed taxes withheld in 2024 were:"; those lines from your post were quoted in my post.

To treat withholding as paid on the dates it was actually withheld, you need to include a Form 2210 with your income tax return. On that Form you need to check box D in Part II (Reason for Filing) and complete Part III (Penalty Computation), using on line 11 the actual amounts withheld during the income tax quarters. In case the IRS asks you to justify the amounts on line 11, you should have payroll or benefit statements that show when the amounts were withheld.

Thanks FactualFran. I appreciate the clarification.

I updated my total fed tax withheld a little later in this post to $16,897. I previously omitted the $200 estimated tax payment I made in Q3 2024. Does this payment result in me not having an underpayment for Q4 and thus no need to make a Q4 estimated tax payment?

I'll be sure to fill out form 2210 and will follow the steps you indicated above, when I do my taxes.

Assuming your $17,642 as your 90% safe harbor is correct, then here is what happens (this roughly follows how the 2210 penalty calculation works). You need to have paid $4,411 per quarter.

Q1: $13,135 withheld which exceeds the $4,411 payment required so no penalty for Q1 and $8,724 carries forward to Q2.
Q2: $9,077 ($8,724 carry forward plus $353 withheld) paid which exceeds the $4,411 payment required so no penalty for Q2 and $4,666 carries forward to Q3
Q3: $4,866 ($4,666 carry forward plus $200 est. payment) paid which exceeds the $4,411 payment required so no penalty for Q3 and $455 carries forward to Q4
Q4: $3,664 ($455 carry forward plus $3,209 withheld) paid which DOES NOT exceed the $4,411 payment required. To avoid a penalty, you need to make a $747 estimated payment by 1/15. I'd pay a couple of hundred extra to play it safe unless you already know for certain that your 90% safe harbor will not exceed $17,642.

[FactualFran]

Thanks FactualFran. I appreciate the clarification.

I updated my total fed tax withheld a little later in this post to $16,897. I previously omitted the $200 estimated tax payment I made in Q3 2024. Does this payment result in me not having an underpayment for Q4 and thus no need to make a Q4 estimated tax payment?

I'll be sure to fill out form 2210 and will follow the steps you indicated above, when I do my taxes.

Not owing a penalty because the required annual payment has been satisfied depends on the payments having been made by withholding plus timely estimated payments. In this case, the estimated payments have not been timely because estimated payments were not made for the first two quarters. The estimated payment for the third quarter is used in the penalty computation (in Part III of Form 2210), not in the determination of whether the required annual payment amount has been made (in Part I of Form 2210).

A post by lstone19 has the details correct. The statement in my previous post that the underpayment for the fourth quarter would be $15 is incorrect. That was what the underpayment penalty would be using the penalty rates for 2023.

[Edit: lined through the incorrect statement about using the underpayment penalty rates for 2023]

[lstone19]

Not owing a penalty because the required annual payment has been satisfied depends on the payments having been made by withholding plus timely estimated payments. In this case, the estimated payments have not been timely because estimated payments were not made for the first two quarters. The estimated payment for the third quarter is used in the penalty computation (in Part III of Form 2210), not in the determination of whether the required annual payment amount has been made (in Part I of Form 2210).

I prefer to look at the test after line 9 in Part I as simply a shortcut to determining that no penalty is due. If you've met the required annual payment by withholding, then there is no need to for Part III. If you were to complete Part III anyway, it will always result in a zero penalty in that situation.

A post by lstone19 has the details correct.

Thank you!

[Aguilar]

Thanks FactualFran. I appreciate the clarification.

I updated my total fed tax withheld a little later in this post to $16,897. I previously omitted the $200 estimated tax payment I made in Q3 2024. Does this payment result in me not having an underpayment for Q4 and thus no need to make a Q4 estimated tax payment?

I'll be sure to fill out form 2210 and will follow the steps you indicated above, when I do my taxes.

Assuming your $17,642 as your 90% safe harbor is correct, then here is what happens (this roughly follows how the 2210 penalty calculation works). You need to have paid $4,411 per quarter.

Q1: $13,135 withheld which exceeds the $4,411 payment required so no penalty for Q1 and $8,724 carries forward to Q2.
Q2: $9,077 ($8,724 carry forward plus $353 withheld) paid which exceeds the $4,411 payment required so no penalty for Q2 and $4,666 carries forward to Q3
Q3: $4,866 ($4,666 carry forward plus $200 est. payment) paid which exceeds the $4,411 payment required so no penalty for Q3 and $455 carries forward to Q4
Q4: $3,664 ($455 carry forward plus $3,209 withheld) paid which DOES NOT exceed the $4,411 payment required. To avoid a penalty, you need to make a $747 estimated payment by 1/15. I'd pay a couple of hundred extra to play it safe unless you already know for certain that your 90% safe harbor will not exceed $17,642.

Thanks, similar conclusion to the approach I took on Jan 7 1:59PM. My conclusion at the time was I should pay $745 Q4 estimated tax. But your breakdown assesses timeliness of the withholding/estimated taxes whereas mine didn't. I'll pay $1,000 to be on the safe side.

Now I need to check on my NY/NYC estimated taxes. I'll post separately about that if I run into issues. Edit: I reviewed my NY/NYC liability and my tax withholding exceeds the 90% safe harbor of NY and NYC taxes owed by about $1500 so no action needed. The withholding from my severance in early Jan '24 covered most of the tax liability in itself since I didn't earn much NY/NYC taxable income the rest of the year.

Cheers

[tibbitts]

One thing that confuses me is that my qualified div are taxed at 15% while ordinary are taxed at marginal income tax rate, yet 1040 line 3b doesn't contain the amount of your ordinary div. Instead, it shows the combo of your ordinary and qualified div. Is something else happening in the forms that I'm not seeing?

I don't understand this either - it seems like the 1040 doesn't present this clearly, even when you or your software fills out everything correctly and the calculation is correct.

[lstone19]

One thing that confuses me is that my qualified div are taxed at 15% while ordinary are taxed at marginal income tax rate, yet 1040 line 3b doesn't contain the amount of your ordinary div. Instead, it shows the combo of your ordinary and qualified div. Is something else happening in the forms that I'm not seeing?

I don't understand this either - it seems like the 1040 doesn't present this clearly, even when you or your software fills out everything correctly and the calculation is correct.

This is all handled when you get to line 16 which is the calculation of the tax. Note that line 16 says "Tax (see instructions)" and the relevant section of the instructions is "Use the Qualified Dividends and Capital Gain Tax Worksheet to figure your tax if you don’t have to use the Schedule D Tax Worksheet and if ... the following applies.
• You reported qualified dividends on Form 1040 or 1040-SR, line 3a.

In short, the Qualified Dividends and Capital Gain Tax Worksheet separates your qualified dividend income from all your other income and calculates the tax due on them as separately.