IDEAS, PLEASE

[AnnieR]

I am preparing a return and am totally confused. Client's agi is $65,000, last year's was 67,000. The only large difference in the two returns is interest and dividends, last year 4700 of ordinary dividends, 7595 of qualified, int of 1181, this year is 617 of ordinary div, 500 of qualified and $173 int. Last year, with higher agi, tax was 5054, this year tax is $5683 on less income. Can anybody please explain? Other income was rental, pensions and w-2, nothing particularly different.

AnnieR

[OldJack]

I am preparing a return and am totally confused. Client's agi is $65,000, last year's was 67,000. The only large difference in the two returns is interest and dividends, last year 4700 of ordinary dividends, 7595 of qualified, int of 1181, this year is 617 of ordinary div, 500 of qualified and $173 int. Last year, with higher agi, tax was 5054, this year tax is $5683 on less income. Can anybody please explain? Other income was rental, pensions and w-2, nothing particularly different.

AnnieR

Its the difference in qualified dividends taxed at capital gains rate. Previous year larger qualified dividend (7595) capital gains calculation produced less tax than current year qualified gains (500).

[rich]

I am preparing a return and am totally confused. Client's agi is $65,000, last year's was 67,000. The only large difference in the two returns is interest and dividends, last year 4700 of ordinary dividends, 7595 of qualified, int of 1181, this year is 617 of ordinary div, 500 of qualified and $173 int. Last year, with higher agi, tax was 5054, this year tax is $5683 on less income. Can anybody please explain? Other income was rental, pensions and w-2, nothing particularly different.

AnnieR

Check this another todays topic ATX tax calculation not working properly .I found very good info there.

[grandmabee]

I am preparing a return and am totally confused. Client's agi is $65,000, last year's was 67,000. The only large difference in the two returns is interest and dividends, last year 4700 of ordinary dividends, 7595 of qualified, int of 1181, this year is 617 of ordinary div, 500 of qualified and $173 int. Last year, with higher agi, tax was 5054, this year tax is $5683 on less income. Can anybody please explain? Other income was rental, pensions and w-2, nothing particularly different.

AnnieR

look at the tab at bottom of 1040 to see the tax calulation. it shows you a break down of what is taxed cg rate and what is at regualar rate

[Kimberly K]

Old Jack is exactly right on this! The qualified dividends will lower the tax, years back I had the wife of the Vice President of the college in town obsess over this very same thing. Once I printed out the worksheet that showed the calculations, I set her at ease.

[AnnieR]

Old Jack is exactly right on this! The qualified dividends will lower the tax, years back I had the wife of the Vice President of the college in town obsess over this very same thing. Once I printed out the worksheet that showed the calculations, I set her at ease.

Thank you, I printed out last year's worksheet and figured out the difference. And Old Jack, you are a treasure.

AnnieR