Error in Nebraska Deduction Logic

Forum|Forum|6 years ago
January 25, 2020
2 replies
26 views

There appears to be a logic error in the TurboTax Nebraska calculation for deductions. The software correctly subtracts state taxes from the Federal Schedule A, but it uses the full amount of state tax, not the $10,000 capped amount used to calculate Federal Schedule A total. This results in an incorrect lower adjusted Nebraska deduction amount.

Best answer by SteamTrain

@phredd12

I have not figured out yet how NE allows for that situation, nor how they justify doing that yet....but, the actual instructions for line 8 of the 1040N are as follows (my italics & underline):

"Line 8 State and Local Income Taxes. If you itemized deductions on your federal return, you must enter the amount of state and local income taxes reported on Federal Schedule A, line 5a even if the total amount of state and local taxes was limited to $10,000 ($5,000 married, filing separately) on Federal Schedule A, line 5e. If you entered general sales taxes on Federal Schedule A, line 5a, do not enter an amount on line 8"

_________________________________________________________________

See page 8 of the actual Nebraska 2019 Instructions booklet:

https://revenue.nebraska.gov/sites/revenue.nebraska.gov/files/doc/tax-forms/2019/f_1040n_booklet.pdf

SteamTrainAnswer

Level 15

@phredd12

I have not figured out yet how NE allows for that situation, nor how they justify doing that yet....but, the actual instructions for line 8 of the 1040N are as follows (my italics & underline):

_________________________________________________________________

See page 8 of the actual Nebraska 2019 Instructions booklet:

https://revenue.nebraska.gov/sites/revenue.nebraska.gov/files/doc/tax-forms/2019/f_1040n_booklet.pdf

____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*

phredd12Author

Level 2

Thanks. That is somewhat contradictory to: All taxpayers that claimed itemized deductions on their federal return are allowed the larger of the Nebraska standard deduction or federal itemized deductions, minus state and local income taxes claimed on Federal Schedule A. I interpret this as only those taxes claimed on schedule A.