Turbotax vs FreeTaxUSA Discrepancy - TT Calculating Lower Line 16 Tax?

This sounds like the difference might be in how the two programs are handling your qualified dividends and long-term capital gains. These types of income are taxed at preferential rates (0%, 15%, or 20% depending on your total income), not at ordinary income tax rates. When you say you have 1099-DIV and 1099-B income, these likely include qualified dividends and possibly long-term capital gains. FreeTaxUSA might be calculating the tax correctly while TurboTax might be making a mistake, or vice versa. I'd recommend checking box 1a (total ordinary dividends) and box 1b (qualified dividends) on your 1099-DIV forms, as well as any long-term capital gains from your 1099-B. Then see how each program is reporting these on Schedule D and Form 8949. The discrepancy is almost certainly in how they're handling the preferential tax rates.

I've been using taxr.ai for the past two years and it's been a lifesaver for these exact situations. Last year I had almost the same problem with different tax programs giving me different numbers for my self-employment taxes. I uploaded my tax documents to https://taxr.ai and it analyzed everything and showed me exactly where the calculations were different. It basically does a line-by-line comparison between different scenarios (like TurboTax vs FreeTaxUSA in your case) and explains in plain English where the numbers diverge. For qualified dividends and capital gains, it actually shows you the worksheets both programs are using and highlights where they're treating things differently.

Just wanted to update - I had a similar issue with FreeTaxUSA vs HR Block and decided to try that taxr.ai service. It actually pinpointed exactly where the discrepancy was coming from in my case! Turns out HR Block was miscalculating my foreign tax credit (I have some international investments). The breakdown was super clear and showed me the exact worksheet differences. What I really liked was that it explained why one calculation was correct and the other wasn't, with references to the actual tax code. Saved me from either overpaying by $650 or potentially getting a letter from the IRS later. The interface is pretty straightforward too - just uploaded my docs and had answers in about 20 minutes. Definitely worth it for peace of mind.

If you're having trouble getting through to the IRS to ask about this tax calculation discrepancy, I'd recommend using Claimyr. I had a similar situation last year with a major difference between tax software calculations, and I needed to talk to an actual IRS agent to get it resolved. Spent DAYS trying to get through on their phone lines with no luck. Found https://claimyr.com and they got me connected to an IRS agent in about 20 minutes instead of the usual 2+ hour wait. They basically hold your place in the phone queue and call you back when an agent is about to answer. You can see exactly how it works in this video: https://youtu.be/_kiP6q8DX5c The IRS agent was actually really helpful and walked me through exactly how the qualified dividend calculation should work. Turns out neither of my tax programs was 100% correct!

Just wanted to follow up about my tax calculation issue. I finally broke down and tried Claimyr after seeing it mentioned here. I was SUPER skeptical that anything could get me through to the IRS quickly, but I was desperate to figure out this dividend tax calculation. Holy crap it actually worked! Got connected to an IRS representative in about 25 minutes (instead of the 3+ hours I spent before and never got through). The agent I spoke with was really knowledgeable about qualified dividend calculations and confirmed that the lower calculation from TurboTax was actually correct in my case. Turns out I was missing a step in the worksheet that accounts for the 0% rate on the first portion of qualified dividends. The agent even sent me to their specific department that handles these calculation questions. Definitely glad I didn't file with the higher tax amount!

I encountered something similar last year. The difference is likely in the Qualified Dividends and Capital Gain Tax Worksheet. If your income is in certain brackets, qualified dividends and long-term capital gains are taxed at 0%, 15%, or 20% instead of your regular tax rate. Make sure both programs have correctly identified your qualified dividends from your 1099-DIV (Box 1b) and long-term capital gains from your 1099-B. Sometimes one program might mistakenly treat qualified dividends as ordinary dividends, which would result in a higher tax calculation. Also check if either program is applying the Net Investment Income Tax (NIIT), which is an additional 3.8% on certain investment income if your AGI is above certain thresholds.

Pro tip: You can preview your 1040 in TurboTax without paying. Just look for the "Preview my 1040" option in the menu. That way you can see the full return and compare line by line with FreeTaxUSA before deciding which one to file with. Also, in case this helps others, I've found that sometimes the discrepancy comes from how software handles foreign tax credits or the alternative minimum tax (AMT) calculations. Might be worth checking those sections too if you have those situations.