Georgia Form 500, Schedule 1 Adjustments to Income

[Imdone]

TurboTax added an entry on my Georgia Schedule 1 form (Adjustments to Income), line 5 (Other) that reads "Federal Schedule A Adjustment", and carried it over to my GA form 500 as an increase to my income. This makes no since to me since Federal Schedule A is my itemized deductions form and has nothing to do with income. I reviewed my deductions and I don't see anything that I claimed on my federal that GA disallows. I've gone over the interview questions numerous times and can't figure out why or where this adjustment is coming from. Could it be a software glitch? HELP, I'm pulling my hair out and want to get my taxes submitted soon.

[LifeinPTC]

This is happening to me as well. I have an addition on Georgia Schedule 1 that says "Federal Schedule A Adjustment." I have no idea why or what it represents. Can someone please reply to this post?

[AnnetteB6]

See the information below for an explanation of the amounts that may be reported on line 5 of the Georgia Schedule 1:

Other Additions (Line 5)

Enter other additions to federal adjusted gross income here, such as:

* Loss carryovers from years not subject to Georgia income tax

* Higher federal depreciation taken than allowed under Georgia tax law for tax years 1981 through 1986

* Adjustments due to bonus depreciation and Section 179 depreciation differences between Georgia and federal tax law. This amount is calculated and transfers from the Federal/State Adjustment Summary

Note: A calculated adjustment appears on this Statement only if it is positive. Negative adjustments appear in "Subtractions from Income" on Schedule 1. Other federal items that are computed based on AGI may have to be recomputed. Some examples are student loan interest deduction, self-employed health insurance deduction, etc. Enter positive adjustments on this schedule.

* Payments for more than $600 in a taxable year made to employees which are not authorized employees.

* Portion of charitable contributions for which a qualified education expense credit was claimed.(If form IT-QEE-TP2 applied, no further adjustment is necessary program will calculate the QEE adjustment.)

* Taxable portion of withdrawals on the Georgia Higer Education Savings Plan.

* The charitable donation relating to the Land Conservation credit claimed.

Note: If applicable, the program recalculates the phase out of federal Schedule A using Georgia modified Adjusted Gross Income.

Enter any other additions that may be applicable. The total carries to Form 500, Individual Income Tax Return, Schedule 1, Adjustments to Income, line 5.

Note for teachers who deduct (up to) $250 for Educator expenses on federal Form 1040. This deduction is not allowed on your Georgia return. If you have taken the deduction on the federal return, the deduction will be automatically added back to Adjusted Gross Income for Georgia income tax purposes and no further adjustment is necessary.

* Deductions taken on the Federal return for charitable contributions made to rural hospital organizations only if a Georgia income tax credit deduction is also being taken on Schedule 2 for credit code 136 :Qualified Rural Hospital Organization Expense Tax Credit.

@Imdone

@LifeinPTC
 

[bganderson]

I have the same situation and cannot see where any of the possible reasons listed pertain to my return.

[BillM223]

My guess is that you have your Georgia state income tax reported on your federal Schedule A, so this amount is added back to income in Georgia because it is not deductible in Georgia. This assumes that you have itemized on your federal return.

Note that Schedule A reports the amount of Georgia tax you have already paid (generally your withholding in 2019), not the tax you are assessed when you do your return.

Anyway, take a quick look at Schedule A on the federal return and see if your state tax is reported - and then compare it to that Adjustment to Income on Schedule 1 on your Georgia return.

[bganderson]

CORRECTION. The federal government was going to raise the percentage floor on medical deductions to 10%, but it delayed that change for 2019. It remains 7.5%. After a long discussion with a TurboTax consultant, we believe the adjustment is being made because the state of GA is using 10% as the percentage floor on medical deductions. I could not verify (after hours of searching and calling) that the GA rate is 10%, but because the amount added back was exactly 2.5% of my adjusted gross income, we assume this is the reason. 

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Actually, it appears to me that TurboTax Federal is using last year's percentage of 7.5% instead of the new 10% to calculate the allowable deduction for medical expenses. In the TurboTax Georgia State, it is using the new 10% and is deducting the additional 2.5% from my income as a FEDERAL TAX INCOME ADJUSTMENT. 

The $2028 amount added is exactly 2.5% of my income.

I have a call into support (my third) to discuss this with them. In the instructions on Schedule A 2019, it shows  "Multiply line 2 by 7.5% (0.075)".

[bganderson]

CORRECTION. The federal government was going to raise the percentage floor on medical deductions to 10%, but it delayed that change for 2019. It remains 7.5%. After a long discussion with a TurboTax consultant, we believe the adjustment is being made because the state of GA is using 10% as the percentage floor on medical deductions. I could not verify (after hours of searching and calling) that the GA rate is 10%, but because the amount added back was exactly 2.5% of my adjusted gross income, we assume this is the reason. 

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Did you ever get a solution?

If not, maybe you have the same situation as I do. This is my response to another person. Let me know if you see the same thing in your return.

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It appears to me that TurboTax Federal is using last year's percentage of 7.5% instead of the new 10% to calculate the allowable deduction for medical expenses. In the TurboTax Georgia State, it is using the new 10% and is deducting the additional 2.5% from my income as a FEDERAL TAX INCOME ADJUSTMENT. 

The $2028 amount added is exactly 2.5% of my income.

I have a call into support (my third) to discuss this with them. In the instructions on Schedule A 2019, it shows  "Multiply line 2 by 7.5% (0.075)".

[DoninGA]

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@bganderson wrote:

Actually, it appears to me that TurboTax Federal is using last year's percentage of 7.5% instead of the new 10% to calculate the allowable deduction for medical expenses. In the TurboTax Georgia State, it is using the new 10% and is deducting the additional 2.5% from my income as a FEDERAL TAX INCOME ADJUSTMENT. 

The $2028 amount added is exactly 2.5% of my income.

I have a call into support (my third) to discuss this with them. In the instructions on Schedule A 2019, it shows  "Multiply line 2 by 7.5% (0.075)".

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The federal medical expense limitation is 7.5% of the federal AGI, not 10%, in 2019.

As stated on the IRS 2019 Schedule A Line 3 - https://www.irs.gov/pub/irs-pdf/f1040sa.pdf

[LifeinPTC]

I called in and spoke to a TurboTax CPA. He couldn't find any reason for the GA Schedule 1 adjustment. Basically he told me to enter a "Subtraction to Income" on Schedule 1 to wash out the addition.

In response to the other post.....This has nothing to do with State Income Tax on Schedule A. I've itemized for years and there has never been a "Federal Schedule A Adjustment" appear on GA Schedule 1.

The amount for me also equals 2.5% of my AGI. BUT, it has nothing to do with medical expenses. If GA allowed 10% instead of 7.5%, the deduction would be bigger and there would be a SUBTRACTION to income. Besides, as someone else posted,  it is 7.5% for 2019. The 10% begins this year.

I think there is a glitch in TurboTax as it relates to itemizing deductions. It also happened on my mom's return.

[LifeinPTC]

Correction on the previous post......I see what you are saying about the 10% GA thing. I had it backwards - it would be an addition to GA income.

[bganderson]

You are correct, the Federal percentage floor on medical deductions was to be raised to 10%, but that change was delayed for 2019. I read an outdated article on the web. My bad!

The conclusion we reached (I too spent much time with a TurboTax consultant - whew!) is that GA requires you to have medical expenses greater than 10% of your adjusted gross income ... so they add back 2.5% to your adjusted gross income (in effect taking away 2.5% of the deduction allowed on your Federal return). A bit counter intuitive. My taxable income in GA *increased* because my medical deductions were *reduced*.  

No where can we find where the GA percentage floor on medical deductions is actually 10% (I spent way too much time on the web and on the phone and essentially gave up!), but because the adjustment added to the income GA was 2.5% we assumed this was the reason. 

[Skeltonma]

I have the same question. I have read through the replies included here. I also have an "uneditable" amount listed as a "Federal Schedule A Adjustment." The amount is 2.5% of Federal AGI. What is the final solution? Accept the calculation and move on? 

[bganderson]

That's what I did. I finally gave up trying to get an answer from the state of Georgia and didn't want to hold up my return any longer. 

[LifeinPTC]

I haven't filed my taxes yet. I was waiting to see if a definitive answer was given. If not, then when I do file, I am going to do what the TurboTax rep recommended and enter a subtraction to income to wash out the addition.

I've checked the GA DOR website and couldn't find anything about this under differences between how Federal and GA handle things. I would think if GA treated medical expenses differently, it would be plainly stated on the website.

[mkwills]

Why did TurboTax add 2.5% of my federal agi on ga 500 Schedule 1 line 5 as “adjustment to Schedule @“?