NJ property tax deduction

[edm]

I paid 2018 property taxes in 2017 before the law changed. My total payment is above the $10,000 max limit. Turbo tax only allows the $10,000 deduction. How can Turbo tax be forced to accept the higher amount which was legal at the time I paid?

[PaulaM]

The maximum deduction for Real Estate Taxes in New Jersey is $10,000. See this link to the State of NJ. TurboTax is up to date with the software for this deduction. If you enter higher than $10,000 in the Federal return for NJ Real Estate Taxes, only the $10,000 will transfer to the State return.

On the federal side, you can take the higher deduction for 2017.

[TaxedToTheMax]

The federal tax law change you heard about in the news only applies in tax year 2018. It does not affect the return you are working on for 2017.

[edm]

It is not supposed to affect this year's tax return, but when I enter the amount that I paid in property taxes, including what I paid in December for the first quarter of 2018, my NJ Turbo Tax return only allows a $10,000 deduction and no higher. This is the number I see when I review the NJ 1040 line 38. I cannot enter the correct amount into this form. I'm thinking that maybe the excess over the $10,000 can be entered into another box and deducted as an itemized deduction labeled "property tax"?

[AnthonyC · Accepted solution]

The law change was made to federal tax law - what you are experiencing is a state tax law issue.  Its a separate limitation imposed by the State of New Jersey, which is denying you the full deduction.

There is a $10,000 cap on the property tax deduction for NJ - "The property tax deduction reduces your taxable income. The amount of the benefit depends on the amount of your taxable income, the amount of your property taxes or rent, and your filing status. You may be able to deduct up to 100% of your property taxes or $10,000, whichever is less. For tenants, 18% of rent paid during the year is considered property taxes paid."

http://www.state.nj.us/treasury/taxation/njit35.shtml 

[edm]

I get it now. Thanks. I think.