Subject to AMT, Turbotax still chooses standard deduction

Forum|Forum|3 years ago
April 17, 2023
1 reply
5 views

Using itemized would lower tax liability. See "Specific instructions - TIP" https://www.irs.gov/instructions/i6251#en_US_2021_publink64277pd0e166

Best answer by RalphH1

Expert Reviewed

You can tell TurboTax you wish to itemize, regardless of the fact that the Standard Deduction is higher. To do this, click on the “Search” field at the top of your screen, type in “itemized deductions, choosing,” and then select the “Jump to itemized deductions, choosing” link. You’ll see verbiage telling you about the higher Standard amount, but also a “Change my deduction” checkbox.

There’s also an “Why would I change my deduction” link on that page, which discusses the possible state implications, which HelenC brought up earlier. These include the possibility of a higher state tax, as well your state refund being taxable next year because of itemizing (which could be more than you save with the AMT...). So there can be a judgement call to make, and since the state return isn’t even started yet when the federal one is in progress, TurboTax is set up to let the user handle this.

@LXXVII, I get what you’re saying, but hopefully doing it manually (as described above) works for you...

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HelenC12

Level 15

It may be that you need to itemize to benefit you on your state tax return. Some states require you to itemized on the federal return to allow you to do the same on the state return.

It is possible the higher standard deduction is not a benefit to you for reasons such as you have already reduced your taxable income to zero by taking the smaller itemized deduction.

I am sure there is a good explanation, but you need someone to look over the tax return to discover what it is. To contact TurboTax, click here.

Source: Employee Tax Expert ThomasM125

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LXXVIIAuthor

Level 4

See the IRS tip I posted the link to: "If you owe AMT, you may be able to lower your total tax (regular tax plus AMT) by claiming itemized deductions on Form 1040 or Form 1040-SR, even if your total itemized deductions are less than the standard deduction. This is because the standard deduction isn’t allowed for the AMT and, if you claim the standard deduction on Form 1040 or Form 1040-SR, you can’t claim itemized deductions for the AMT."

...in my case this is true, but Turbotax is not choosing it. Tsk Tsk!

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RalphH1Answer

Level 6

Expert Reviewed

You can tell TurboTax you wish to itemize, regardless of the fact that the Standard Deduction is higher. To do this, click on the “Search” field at the top of your screen, type in “itemized deductions, choosing,” and then select the “Jump to itemized deductions, choosing” link. You’ll see verbiage telling you about the higher Standard amount, but also a “Change my deduction” checkbox.

There’s also an “Why would I change my deduction” link on that page, which discusses the possible state implications, which HelenC brought up earlier. These include the possibility of a higher state tax, as well your state refund being taxable next year because of itemizing (which could be more than you save with the AMT...). So there can be a judgement call to make, and since the state return isn’t even started yet when the federal one is in progress, TurboTax is set up to let the user handle this.

@LXXVII, I get what you’re saying, but hopefully doing it manually (as described above) works for you...

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"