Deductions & credits

I'm having this problem, too: I can't switch to itemized, even though TurboTax is telling me that it's better. I just end up looping on the screen. Looks like a software eror. But more importantly...

 

You can't be sure that "the program is giving you the best deal" unless you know more about the state taxes. For example, Maryland requires the same deduction as federal. But Maryland's standard deduction is only $2,350/$4,700.  So you have to compare the combined refunds.  

 

Let's say you're a Maryland resident filing jointly, with itemized deductions of $24,700. The standard deduction of $25,100 is a little better for your federal return. But it's much worse for your state return, because now you have to use the Maryland standard deduction of $4,700. However, if you itemize, you get to deduct the full $24,700 on your Maryland return. 

 

Quick math for this example: 

Federal deduction increases from $24,700 to $25,100 = $400 x 22% = $88 tax reduction

Maryland deduction decreases from $24,700 to $4,700 = $20,000 x 7% = $1,400 tax increase

 

Note that TurboTax DOES NOT do this check for you. It chooses itemization  based on what's best for your federal return, and locks you in for state.  I found this out the hard way, and had to amend my state and federal returns a few days later when I realized how paltry Maryland's standard deduction was. Under the standard deduction, my federal taxes were about $100 lower but my state taxes were about $1,200 higher.  Do this check yourself manually, especially if your itemized deductions are close to the standard deduction.