Does TurboTax take Virginia & Federal into account when deciding to use Standard Deduction for Federal (making it required for Virginia)?

[jmirus]

I understand that Virginia hasn't updated its tax code in response to Federal changes for 2018, and that's why taking the standard deduction is so costly in Virginia on the Federal return (which forces it on the Virginia return). What I want to know is whether TurboTax looked ahead to determine that OVERALL the Standard Deduction would be better for Federal and Virginia COMBINED before deciding, based on Federal alone, that the standard deduction should be used. It might be possible, in some cases, that choosing to itemize on both would bring a better total result. The itemization would have to come close to the standard deduction on the Federal return because of the higher federal tax rate. But...just in case... does TurboTax analyze this question before deciding?

[AnnetteB · Accepted solution]

I cannot say with certainty, but based on the fact that the Federal choice between itemized deductions and the standard deduction is made prior to you completing the state tax return, it is very unlikely that the program will take into account the combined Federal and state returns to advise you whether itemized deductions or the standard deduction is best. 

You would need to go back to your Federal return and change your deduction from standard to itemized or vice versa, then revisit your state return and make the comparisons yourself. 

[GeoRho]

One example - My total deductions don't exceed $26.6K. If I use Fed STD deduction (as TT suggests) my total Fed + VA tax owed = ~$5,750. If I use Fed ITEMIZED, my total Fed+VA tax owed = ~$5,300. My Fed owed increased by ~$500 and my VA owed "decreased" by ~$950. I tried to use Fed STD and change VA to use ITEMIZED but could not get VA to accept this setting.

[AnnetteB]

Some states allow you to claim a different deduction on the state return than what you used on your Federal return.  Unfortunately, VA requires that the state return match the Federal.  If you itemize on Federal, you must itemize on VA; same with the standard deduction.  

[GeoRho]

Virginia Passed a Bill on Feb 11 that will selectively conform VA tax law with Fed tax overhaul. For example, standard deduction is increased 50%. Likely will take TT some time to incorporate changes.

[gerrylewis]

Same here, GeoRho. With itemized deductions of $21K, TurboTax chose std deduction for federal. Result is $1302 Fed refund and owe VA $2005. After reading some of the posts, went back and forced TurboTax to use itemized deductions resulting in $833 Fed refund but only owe VA $1270. Saving me $266 with itemized.
So TurboTax doesn't pick this up automatically. And I'll remain in a holding pattern for any VA tax changes that make their way into TurboTax before I file.