No, that screen will show up if you are taking the standard deduction on the federal return. If you itemized on your federal return, Arizona would itemize as well and you won't see that screen. Add all of your expenses and TurboTax will give you the largest deduction. You can switch back and forth on your federal to see how it changes. That link will tell you how.
Business expenses have nothing to do with the standard or itemized deductions. Business expenses only reduce your business income.
You can take either the standard deduction or itemized deductions (line 12 of Form 1040) which reduce taxable income.
If you have a business profit that is generating self-employment tax - that tax can't be reduced by the standard or itemized deductions. And only business expenses can reduce business profits. You are better off taking the higher deduction (itemized or standard) on both your federal and Arizona returns. Taking the lower standard deduction on your AZ return will increase your taxes.
TurboTax will default and record the higher deduction on Line 12 of Form 1040. Some states make you use the same option as you used on your federal return. Arizona is not one of those states. You can choose either option, but TurboTax will default to the larger deduction - the amount that produces the lowest tax liability.
If you want to itemize on your Arizona state return, make sure you have entered all of your itemized deductions in the federal section or you can just itemize on the federal return. When you take the standard deduction for federal, TurboTax ignores the itemized deductions but they remain there in case they are needed for your state return.
There is only one module for each state. Each state module will prepare all available form options for that state.
What are itemized deductions? (they have nothing to do with Schedule C business returns)
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