Itemized Deduction may be calculated incorrectly by TurboTax online.

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TurboTax Premier Online

AnnetteB6

Employee Tax Expert

Yes, your state withholding amount of $35k is contributing to Schedule A line 5a. It would also include any local withholdings or a balance due for the state that was paid during 2025.

That amount alone could make itemized deductions more attractive for your 2025 tax return. But, keep in mind that since you are expecting a significant refund for your state return that if you itemize for 2025, then that refund will likely be taxable income for 2026.

If you were to take the standard deduction instead, then the state refund would not be taxable on your 2026 return.

Use the instructions in the following TurboTax help article to compare the standard deduction and itemized deductions for your return and select the one that is the best for your situation:

How do I change from the standard deduction to itemized (or vice-versa)?

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dmertz

Level 15

Many people on this forum who think that TurboTax is not calculating itemized deductions correctly are failing to realize that their MAGI for this purpose is high enough to reduce the amount of SALT taxes that are permitted to be deducted. This deduction phases down from $40,000 ($20,000 if Married Filing Separately) to $10,000 ($5,000 if MFS) between $500,000 ($250,000 if MFS) and $600,000 ($300,000 if MFS) of MAGI.