Federal Schedule A deduction for Arizona Estimated Taxes don't added up to the numbers in the Tax Payments Worksheet

[MindyB]

It depends, there are a few possible reasons for this.  First, the tax law only allows you to deduct state taxes in the calendar year you actually paid them. So any Arizona estimated payments made in January 2026 cannot be deducted on your 2025 federal return.

Additionally, the federal state and local tax deduction cap is $40,000 for the 2025 tax year. If your total state taxes exceed this new $40,000 limit, Schedule A will not include everything, even if your worksheet shows higher totals.

This deduction also begins to phase out if your modified adjusted gross income is over $500,000 ($250,000 for married filing separately).

[user17724743702]

The limits on tax deduction and income don't apply.  The program appears to have an error in calculating the Az estimated taxes payed in the calendar year 2025.  The estimated tax worksheet has the correct numbers but when the program calculates the state income taxes on Federal Schedule line 5a the calculated number does not agree with the estimated tax worksheet numbers.  If this issue is not resolved in further updates will either have to live with the error and file the Turbotax state return  or file a paper return.

[AnnetteB6]

In order to take a closer look at the situation you described to try to offer an explanation or determine if there is something that needs further attention, it would be useful to have a diagnostic copy of your tax data file.  The diagnostic file will not contain personally identifiable information, only numbers related to your tax forms.  

If you would like to provide us with the diagnostic file, follow the instructions below and post the token number along with which version of TurboTax you are using in a follow-up thread.

Use these steps if you are using TurboTax Online:

• Sign in to your account and be sure you are in your tax return.
• Select Tax Tools in the menu to the left.
• Select Tools.
• Select Share my file with agent.
• A pop-up message will appear, select OK to send the sanitized diagnostic copy to us.
• Post the token number here. 

If you are using a CD/downloaded version of TurboTax, use these steps:

• Select Online at the top of the screen.
• Select Send Tax File to Agent.
• Click OK.
• Post the token number here.

If you are using a Mac version of TurboTax, use these steps:

• Go to the Menu at the top of the screen and select Help.
• Then, Send Tax File to Agent.
• Post the token number here.

@user17724743702 

[user17724743702]

Post token number 191784234-22919999

[AnnetteB6]

Thank you for providing your token number.  I have taken a closer look at your tax file and I do not see any issues with the amount reported on Schedule A line 5a.  The number in that field included 3 of the 4 state estimated payments, as it should.  The fourth estimated payment was made in early 2026, so it should not be included.  But, there was a 2024 estimated payment made in early 2025 that has been included, along with your 2024 state refund that you allocated to your 2025 return.  

Since a portion of your total tax payments and withholdings to the state for your 2024 return was actually paid in 2025, a portion of the tax refund you received must be allocated to 2025 as well.  Then, that allocated amount of your refund is used to adjust the payment that was made in 2025.  Without making this adjustment, it would be possible for a taxpayer to artificially inflate their deductions for the current tax year by overpaying their 4th quarter estimated payment in January.  

In your case, the amount of your state refund for 2024 divided by your total tax payments and withholdings did come out to be about 9.6%.  Therefore, the estimated payment made in 2025 was reduced by that same percentage before it was included on Schedule A as part of your itemized deductions.  

The State and Local Income Tax Worksheet (St Refund Wks) shows the numbers involved in the calculation.  

All that being said, your return is using the Standard Deduction, so Schedule A is not included for your 2025 tax return at all.

You are free to electronically file your return whenever you are ready.  There are no errors that need correction before you file.

@user17724743702 

[user17724743702]

Thanks for your quick responses and patience in helping me understand the issue. You are correct in that the prior year refund needs to be reduced by the percentage of any payments paid in the next year, as determined in  Schedule 1 line1.  I did use the standard deduction on the Federal return but itemized on the State.  Again Thanks for all the help.