When preparing a Form 1040 in TaxSlayer Pro, at the top of the interactive screen is a field labeled "Effective Tax Rate". This percentage shown is equal to the total tax divided by the taxable income.
In this context, total tax includes the following:
- Income tax
- Other taxes calculated in the return on other forms, e.g., Forms 8814 and 4972
- Additional taxes shown on Schedule 2
- Child Tax Credit and Other Dependents Credit
- Nonrefundable credits from Schedule 3
Taxable income equals adjusted gross income less qualified business income deduction and either standard deduction or itemized deductions.