Tom Russ wrote:

- quote -

I'm not weighing in on the issue on whether or not the tax
tables are indeed 'loaded' (or hardcoded right into the
application) nor am I qualified to discuss any algorithms
that may or may not be used instead, but I certainly can
tell you there's not a problem in 'loading' any table.
Those values and brackets are certainly extremely easy to
have in the tax application; all they are is a fairly
limited amount of numbers easily convertible to any data
structure for lookup when needed. Easy programming.

Now, again, whether it's done or not, I done know.

--
Regards -

- Andrew

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

"Don Priebe" <priebe[at]iname.com> wrote:

- quote -

IRC section 3.

--
Phil Marti
Clarksburg, MD

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

"baumgrenze" <baumgre...[at]yahoo.com> wrote:

- quote -

I doubt that the software actually loads the table.
Instead, it almost certainly uses an algorithm to compute
the values in the tax table. I did this a while ago when I
had an Excel spreadsheet for doing my taxes, and it isn't
that difficult to figure out the algorithm. (But it isn't
the one you think it is. See below).

- quote -

When I last looked at this in any detail, the tax amount was
computed based on the middle of the tax bracket, not the
highest amount. (Downloading the instructions now). OK,
picking one bracket at random, MFJ:

72,900 to 72,950 MFJ: $11,346

Schedule Y-1: 61,300 to 123,700
$8440 + 25% of amount over 61,300.
Tax on 72,900 = 11,340
Tax on 72,925 = 11,346.25 rounds to 11,346
Tax on 72,950 = 11,352,50 rounds to 11,353

So, if you had actually computed this, you would have found
that the tax tables do, in fact, do the reasonable thing and
compute tax on the mid-point of the range.

Finally, the brackets are only $50 wide, not $200, so you
really can't have more than about a $6 difference.

- quote -

Well, half of the time the tax table increases the tax by up
to a few dollars and half the time it decreases it. But
there really isn't any choice available to the software or
to you as the tax payer. You have to use the tax tables
unless your taxable income is above $100,000.

- quote -

Presumably you would just get an automated notice correcting
an arithmetic error on your return. Since there isn't any
choice in the matter, you need to follow the instructions.

Of course it the future, you could just try to increase your
taxable income to the point where you don't need to use the
tax tables anymore.

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

- quote -

It's not that one way is more 'accurate' than the other. The
instructions clearly state that the tax tables MUST be used
for taxable incomes under $100K and the tax schedule
(computation) MUST be used for higher incomes. (Someone else
will no doubt provide a reference to the actual code or
regulations.)

--
Don EA in Upstate NY

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

This year I stopped to check how my 'popular tax program'
calculated the tax on my taxable income. It was clear that
it was derived from a lookup in the tax tables rather than
from the more accurate determination arrived at by using the
tax schedule.

From my humble perspective it would seem a lot more bother
to load the entire new tax table for lookup than to write an
algorithm that uses the tax schedule. The tax table appears
to apply the tax on the highest income in the $200 increment
to the entire increment. The difference is small, $3-5 in
the 25% bracket. Somehow this approach does not fit the "we
do everything to minimize your taxes" promise of the
program.

Does the IRS also use the tax table approach when doing a
preliminary check on a return? Is there a higher risk of
audit if they must stop and use the tax schedule?

This is the only explanation I can find for the 'program's'
using the table rather than the schedule. They promise to
'defend you' if audited. Perhaps the customer pays a bit
more and the risk to the software company is a bit less?

Thanks,

baumgrenze

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >