I agree there is a flaw. Here's what happens:
Suppose you have 10k in property taxes, married filing separately.
In order to properly fill out your federal return, you only claim 50% of what shows up in your 1098. Including mortgage interest paid and property taxes. So you enter in 5k property tax, and your federal return computes correctly. So far, so good.
Then TurboTax imports your Federal numbers into NJ. In particular, it imports 5k in property taxes. Then, if you go to 'forms' you can see that NJ-1040 automatically halves that down to 2.5k due to your married filing separately status. So you are only getting credit for 1/4 of the tax paid, instead of 1/2.
To fix this, you need to manually correct the 'property tax paid' to the full amount (10k) in the NJ deductions and credits. I consider it an oversight that TurboTax doesn't handle this well automatically, or at least warn users with 'married filing separately' status that this could be an issue.
