That is very difficult to analyze without seeing your return, but I will try to explain the most likely reasons.
The itemized deductions you enter are not necessarily what you get to deduct. Even if you’re itemizing, entering $2,500 of deductions doesn’t usually mean a $2,500 refund. Your taxable income can be reduced by the amount over the standard deduction allowed by the IRS. A deduction lowers taxable income but doesn't increase the refund dollar amount. For example, let's say your standard deduction is $12,700, and you've already entered $12,600 in deductions. Your $2,500 deduction can lower your taxable income up to $2,400, which may increase your refund by only $240.
There are other various reasons why your property taxes are not affecting your tax liability.
- One of the reasons your real estate taxes may have no impact on your refund is because your Schedule A, Itemized Deductions are less than your standard deduction. If the standard deduction amount is greater than the itemized deductions amount, TurboTax enters the standard amount.
To see if TurboTax is using the standard deduction or itemized deductions, you can preview your 1040:
- Click on My Account.
- Click on Tools choose view Federal Tax Summary.
- In the same row as Tax Timeline, choose Preview my 1040.
- Scroll down to Line 40 for Form 1040 or Line 24 for Form 1040A.
- To get out of Preview my 1040, click the back button that is in the same row as Tax Timeline.
2. Another explanation is, if your Adjusted Gross Income is less than your itemized deductions, your refund will not change.
3. You may be subject to Alternative Minimum Tax (AMT). In calculating the AMT, you cannot take itemized deductions for state and local income tax, real estate taxes and personal property taxes, even though these are deductible on your regular return.
It’s calculated at the same time as your regular taxes. If the alternate method results in a higher tax, the difference between it and your regular tax is the AMT tax - the extra tax you'll pay.
TurboTax will calculate this tax as you’re doing your taxes and let you know if you owe this tax. If you have the AMT tax, it will be on your Form 1040, line 45. Your return will also include Form 6251 that shows the calculations for your AMT tax.
