Itemizing New York State Deductions

[melpaw57]

For 2023 I have investment advisor fees of around $6,000. I understand that these are not deductible on my Federal return but can be a deduction on my New York State Return. I take the standard deduction on my Federal return, and I believe I can still itemize on my State return, but I didn't see an option in TurboTax to do so.

Thank you.

[Opus 17]

You list all your itemized deductions in the federal section and they flow to the state.  However, even then, remember that this deduction in particular is limited by the 2% rule (if your AGI is $100,000, only deductions over $2000 are included), and remember that your total itemized deductions must be more than the state standard deduction for your filing status.  Turbotax will do all this automatically.  Have you looked at your NYS itemized deductions (I believe it is form IT-196). 

[melpaw57]

Thank you. So I had entered all of my Federal Itemized Deductions (including the investment expenses) into TT, and it gave me the Standard Deduction.  And when I got to my State return, it still gave me the Standard Deduction, so I guess I am to presume that my State Deductions are not adequate to justify Itemizing Deductions on my State Return?

[LindaS5247]

Yes, correct.  TurboTax helps to determine whether itemizing or taking the standard deduction is best for you, based on your entries. 

This will flow through to your state tax return as well, and if it was more advantageous to use the standard deduction for your state, that is what TurboTax will choose for you.

[rsingh1027]

How can I examine my proposed IT-196?  I believe my NYS Itemized Deduction is larger than the NYS Standard Deduction, but Turbo Tax is not providing this form after automatically determining use of the Standard Deduction.  The Federal Form provides an opportunity to compare and choose, but the State Form does not.

[Opus 17]

@rsingh1027 

If you are using the program installed on your computer, click "Forms" at the top left to change to forms mode, you can look at the NY worksheet or bring up form IT-196.  However, remember that NY income taxes (which are deductible on your federal return) are not deductible on your state return, that may affect your expectations. 

If you are using the program online, you can't see the forms and worksheets unless you pay, and even then some of the forms are hidden.  You may need to contact customer support and ask them for the details on the form.

[rsingh1027]

Thank you for the prompt response.  I am using the online program, which I did not realize was so limited for such an important Form.  I am finding Turbo Tax repeatedly limited despite the ubiquity of e-Filing...

[Opus 17]

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@rsingh1027 wrote:

Thank you for the prompt response.  I am using the online program, which I did not realize was so limited for such an important Form.  I am finding Turbo Tax repeatedly limited despite the ubiquity of e-Filing...

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You can't view any forms in turbotax online until after you pay.  If you could see the actual forms, you could enter your info and print the form without paying and file by mail, or copy the numbers onto a paper form and file by mail, also without paying.   If you want to see the forms as you go, you have to use the desktop program for which you pay up front. 

[Jayyyyy]

Hi @Opus 17 , revisiting your answer while finalizing NY state tax return for 2024.

The most confusing part to me is that, on IT-196 instruction for 2024:

Lines 5 through 7

If, on your federal income tax return, you claimed an itemized deduction for state and local taxes you paid, enter the applicable amounts from federal Schedule A, lines 5a, 5b, and 5c.

-> But this should NOT include NY state and local taxes included in 5a, 5b or 5c, is this correct?

I'd appreciate it if you could answer this question.

[Opus 17]

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@Jayyyyy wrote:

Hi @Opus 17 , revisiting your answer while finalizing NY state tax return for 2024.

The most confusing part to me is that, on IT-196 instruction for 2024:

Lines 5 through 7

If, on your federal income tax return, you claimed an itemized deduction for state and local taxes you paid, enter the applicable amounts from federal Schedule A, lines 5a, 5b, and 5c.

-> But this should NOT include NY state and local taxes included in 5a, 5b or 5c, is this correct?

I'd appreciate it if you could answer this question.

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You include everything from your federal schedule A.  Even state and local taxes.  Because the NY state and local taxes are subtracted back out on line 41.  Lines 1-20 are essentially a restatement of your federal schedule A as-is, and lines  21-48 are New York specific additions and subtractions, including a subtractions for NY state and local taxes which are not deductible in NY.