topic state tax credits in Deductions & credits

state tax credits

Strykermac — Tue, 31 Dec 2019 19:22:20 GMT

How do you enter a charitable contribution that includes a state tax credit in TT?

Re: state tax credits

Vanessa A — Tue, 31 Dec 2019 19:53:14 GMT

The Charitable Contributions will flow from the federal tax section. To enter them after logging in click the following:

Deductions and Credits
Lets Get Started
Go through the questions until you get to the Charitable Contributions Section

You can also use the search feature by clicking on the magnifying glass at the top of the screen, then enter charitable contributions then click jump to charitable contributions.

Re: state tax credits

Strykermac — Thu, 02 Jan 2020 21:14:29 GMT

Thank you,

I am fairly clear on how to enter normal charitable contributions. But my understanding is that the IRS opined last year that if there was a state tax credit benefit, the deduction would have to be reduced by that amount.

When I enter the charitable contribution in the federal tax section, there is no question asking information about offsetting tax credits.

For example, I have one charitable contribution of $1,000 that provides a 60% state tax credit. Do I enter the full $1,000 in the federal section, or do I enter the $400 (deduction net of benefit).

However, including the tax credits, my combined state income tax and property tax well exceed the $10,000 maximum -- so maybe this doesn't matter...

Or does TT recognize this situation when I enter the tax credits in my state (OR) return?

Re: state tax credits

avionicsloader — Tue, 11 Feb 2020 02:08:12 GMT

TurboTax doesn't ask about contributions that result in state tax credits. It's up to you to not include those contributions, or portions of contributions, that don't qualify under the federal rules.

Sounds like you may already be aware, but the IRS is also proposing regulations that may allow you to treat those contributions at state income tax payments, but those are still subject to the $10,000 limit on SALT deduction.

Re: state tax credits

Strykermac — Tue, 11 Feb 2020 22:13:35 GMT

Thank you. I thought as much. Still TT appears to have an adjustment on the state tax for Oregon, where the tax effect of the deduction/credits is accounted for. So if I enter the non-credit portion of the charitable contribution on the federal return, it will not correctly calculate for the taxes on the state return...

Let's see if the IRS can provide some clarity to this... LOL

Re: state tax credits

KrisD15 — Tue, 11 Feb 2020 22:58:58 GMT

I believe the IRS is addressing the issue where certain states were/are setting up credits to side-step the 10,000 State and Local Tax limit.