In Montana each taxpayer is entitled to deduct $5,000 in federal income taxes if they itemize. Your program has a Line 4A and Line 4B reduction worksheet. This calculation is incorrect. First of all, each taxpayer gets to deduct the first $5000 of federal income tax withheld if they itemize. If they get some or all of that amount refunded then the next tax year the refund is included as a recovery of previous year's income tax deducted. Your worksheet disallows that refund in the current year. This is incorrect. This is especially egregious if the spouse happens to be the larger income earner. Your worksheet calculates the reduction on the taxpayer and not on the spouse. If the taxpayer had $4,000 in withholding and the spouse had $9,000 in Withholding and they were getting a refund of $2,000. You have reduced the taxpayers deduction by $2,000. This is incorrect as the refund is still smaller than the amount the spouse is disallowed to deduct in this tax year. This needs to be fixed as every return where there is a refund and the taxpayers are filing Married Filing Separate on the same form in Montana are getting the wrong Federal Deduction on the Montana Return. This is a huge issue for Montana Filers.
