There are several issues, all of which can be surmounted.
First, when you entered the Education Expense Credit of $700 under "Take a look at Georgia credits", in the Georgia interview, it created two entries as I am sure you saw: Education Expense Credit and Business and Individual Credit. I don’t know why it did this, since only one $700 credit appears on your Georgia return. Anyway, let’s ignore the duplicate for the moment since it doesn’t appear to affect your tax return.
Second, as soon as you enter this education expense, then on the previous screen (“Here’s the Income that Georgia Handles Differently”), when you go back to it, there will be an entry “Other Additions to Georgia Income” with $700.
That’s because on the screen “Qualified Education Expense Tax Credit”, you must have checked Yes. So, TurboTax thought that you were trying to take advantage of the $700 as a tax credit and also as a deduction on your federal return (which would flow down to Georgia) – this would be double-dipping. So, when you got the credit and said that you also deducted it on your federal return, the amount of $700 was made an addition to Georgia income (i.e., it was no longer deductible in Georgia).
This would be fine except that you really didn’t take the $700 as a deduction on Schedule A on the federal return. “What?” you say. The reason you didn’t is because of the SALT limit (State And Local Taxes). Your state and local taxes were capped at $10,000 and your entered amount (including the $700) was way more than that.
So, in essence, you didn’t take the $700 as a deduction after all. So go back to the Education Expense Credit section (under “Take a look at Georgia credits”) and answer NO this time. You should see your Georgia refund increase now because there is no longer $700 added to your Georgia income, and the (previous) screen that showed additions to Georgia income no longer shows it.
When you finish this sub-interview, you should be back to “Take a look at Georgia credits” with its two $700 entries. This time, click on the other Edit button, the one for Business and Individual Credit. Proceed through this sub-interview, and again, when you are asked “Did you take a federal itemized deduction of state income tax on your federal return…?”, answer NO. This time it won’t change your refund.
But we are not quite done yet. When you start the Review for Georgia (“Let’s check it over”), the first “Check this Entry” screen is a message about “Donation Credit Amount should be blank if you are not claiming the Qualified Education Donation”. Well, ignore the fact that you ARE claiming the donation, but it doesn’t think you are because of the answer we just changed.
On this screen, there is a box to the right of “Donation Credit Amount”. TurboTax thinks it should be blank, so go up to the blank and hit Delete until it’s all gone. Then scroll down and hit Continue.
Hit Continue again and when it says it wants to review your state return again, hit Continue, and the next screen, press “Run Review Again”.
This time the error messages about the Donation Credit Amount do not appear, and you have passed the Georgia review.
I haven’t run your Federal review, but I leave that to you.
@JMS_2022
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