I have loaded most of the income and deductions into 2020 turbotax, for a deceased tax return for my uncle. The North Carolina refund shows him getting back all of his NC taxes paid, but it shows a deduction from income well beyond what his reported income is. I think there must be an update to NC forms, what say you?
There are no known issues with North Carolina forms. This is a tax scenario that's out of the norm, but certainly possible. Taxpayers report deductions from their federal Adjusted Gross Income (AGI) on Part B of Form D-400 Schedule S. You can look at the Schedule S and see what deductions seem out of place, comparing them to Part B, Deductions from Federal Adjusted Gross Income on page 19 of the Form D-401 North Carolina Individual Income Tax Instructions.
See the TurboTax Help article How do I view and delete forms in TurboTax Online? for guidance on viewing state returns.
The NCDOR.gov website (https://www.ncdor.gov/taxes-forms/individual-income-tax/north-carolina-standard-deduction-or-north-c...), states that Charitable contributions are allowed as an itemized deduction, however, for 2020, NC decoupled from the temporary increase allowed under the CARES Act that allows and individual to increase charitable deductions from 60% to 100% of AGI. NC adopted the Code as of Jan 1, 2020, which excludes the CARES Act, and NC individuals may only deduct qualified contributions up to 60% of AGI.
In preparing my uncle's tax return, for 2020 there is a new section on the NC Standard/Itemized Deduction Worksheet, "Gifts to Charity", (this section was not in 2019 Turbotax worksheet). This section allows him to list a "Carryover from prior year" of 144,877 (which is the correct figure from his 2019 federal return). This results in him having a deduction greater than both 60% of his AGI and even 100% of his AGI, and results in a negative 91,149 of NC taxable income on line 14 of D-400.
If itemized charitable deductions for NC residents are limited to 60% of AGI, for 2020, my uncle's AGI is 111,546, which would result in his total charitable contributions for 2020, to be limited to 66,928. For 2020, his charitable giving amounted to $26,743, so his charitable contribution carryover would then be limited to $40,184. If this is a correct understanding, is Turbotax going to correct this in the 2020 NC state return?
There are now 3 of us reporting the NC deduction error for charitable contribution limit for NC. It should be 60% and not 100%. See my below posts, as well as DonaldCarver & SteamTrain.
Will you please forward this issue to the appropriate personnel with TTax to work on a fix.
As of March 4, 2021, the NC deduction error has not been fixed. Please see various individuals reporting this problem.
Any news on this fix that still remains. See other post of others reporting this problem.