How do I fill out my 1040 to show an inheritance to be used in the calculation of my sales tax, and not be included in my AGI, such that the inheritance is not taxed?

[rjs · Accepted solution]

When you go through the EasyGuide interview for the sales tax deduction, after you click Done on the "Places You Lived" summary screen, you get a screen that asks "Did you have any nontaxable income like this in 2017?" It gives a few examples of nontaxable income, but you are not limited to those. If you click Yes, the next screen gives you a box to enter the total amount of nontaxable income that you want to add for calculating the sales tax deduction. See the attached screen shots.

You don't identify the type of income, and you could include different types of income. You just enter the total. The amount is not identified as an inheritance or anything else. It will not be entered anywhere on your Form 1040, so it will not be included in your AGI and will not be taxed. It is only used to calculate the sales tax deduction.

[Bsch4477]

Since inheritance is not entered into the 1040 because it is not taxed, the inheritance cannot be included for the calculation of sales tax to be deducted on Sch A.

[thickeyabc]

That is opposite from what I have been told (maybe in error) for 2017 (at least) returns.  I have been told you CAN include the inheritance in the calculation of sales tax, even though the inheritance in NOT taxable.
Any guidance / contradiction / reference?

[Bsch4477]

<a rel="nofollow" target="_blank" href="https://taxmap.irs.gov/taxmap/instr/i1040sca-002.htm">https://taxmap.irs.gov/taxmap/instr/i1040sca-0...>


Your 2017 income is the amount shown on your Form 1040, line 38, plus any nontaxable items, such as the following.
Tax-exempt interest.
Veterans' benefits.
Nontaxable combat pay.
Workers' compensation.
Nontaxable part of social security and railroad retirement benefits.
Nontaxable part of IRA, pension, or annuity distributions. Don't include rollovers.
Public assistance payments.

[thickeyabc]

Can you confirm that inheritance $$ can NOT be included in the calculation of sales tax?

[Bsch4477]

The list above is what can be included.  I cannot prove a negative.

[thickeyabc]

I have had several confirmations that non-taxable inheritance can be included with any of the 'non-taxable' items mentioned above.  Please advise how I include this amount in TurboTax.

[Bsch4477]

Please cite your “confirmations”.

[thickeyabc]

AARP Tax Aide, and several other individuals who do taxes

[thickeyabc]

Can anyone advise as to the steps in TurboTax to identify your non-taxable income as the examples listed above?

[Bsch4477]

I see on Taxaide where inheritance is, in fact, allowed, and I have referred your question to superusers at large who might be able to help you include that income to calculate your sales tax deduction. I, myself, cannot see how to do it. Thanks for your perseverance...you taught me something.