2019 Arizona Form 348 being deducted from Itemized deductions

[jgleigh]

I have $2269 of tax credits for Arizona for contributing to a School Tuition Organization. TurboTax correctly puts $1138 on Form 323 and $1131 on Form 348. The problem I'm having is that TurboTax is then deducting $1131 from my Arizona Schedule A because it thinks I'm also claiming this deduction on my Federal form. How do I fix Arizona Schedule A to correct this issue?

[jgleigh]

The $1131 is showing up under "Amount of charitable contributions for which you are claiming a credit under Arizona law" but that isn't correct. I can't find any place to tell it that the $1131 isn't being claimed as a charitable donation.

[KrisD15]

Are you itemizing on your federal return? 

Does it correct itself (on the AZ return) if you change the federal to standard deduction? 

[jgleigh]

I am itemizing on my Federal return. Changing the Federal return to Standard Deduction does not correct the issue on the AZ Schedule A.

[jgleigh]

There is definitely something strange with how it's handling AZ 323 and AZ 348. I have the $2269 entered as occurring in 2020 and that makes the incorrect adjustment to AZ Schedule A of $1131.

If I instead move the $2269 to 2019 on AZ 323 and AZ 348, then it incorrectly adjusts AZ Schedule A by the full $2269.

[jgleigh · Accepted solution]

I figured it out!

You have to select both options on the School Tax Credits screen:

I donated to a Arizona private school...

I have a credit carryover...

The screen to specify if you're deducting it on your Federal return doesn't appear unless you select the carryover option (even if you don't have an actual carryover).

[maty93]

I did the credit carryover for $1131 but the Less: Itemized deductions still changes under taxable income by about $1000. So in other words, my taxable income increases by $100 and I my state TAXES OWED also increases! So I do not get the full tax credit, it is still less about $45 in the end, even though I did $1138 under original and $1131 under overflow. 

Why is this happening? My taxable income shouldn't increase because I made the second donation! This has no affect on my federal return.

[jgleigh]

After the Credit Carryover screen, there should be a screen that asks how much of these credits is deductible on your federal return. Those two boxes should be zero.

[bellasmom167]

I'm having a similar problem with Arizona charitable donations.  We had qualified donations in 2019 in addition to a carryover from prior years.  This year for the first time, Turbotax is deducting not only the current year's qualified donations but also any accumulated carryover amounts from federal itemized deductions.  So for example, in 2019 say we made and deducted $400 in qualified donations on our federal return, and had $450 of qualified donations carried over from previous years.  On this year's return (2019), Turbotax is showing the total of $850 as "Amount of this contribution claimed as an itemized deduction on federal Schedule A", and is reducing our 2019 itemized deductions for $850 for Arizona purposes.  That is not correct.  It is only the $400 current year donations that should be deducted from current federal itemized deductions to arrive at AZ deductions.  I believe it's a flaw in their form 321.  All I can see to do at this point, is to override the incorrect amount.